US dollar strong after data and monetary policy shift
The US dollar has been strong across all major pairs after key data - much better-than-expected October employment growth and, critically, very big upward revisions in weak job creation this summer.
The US dollar has been strong across all major pairs after key data - much better-than-expected October employment growth and, critically, very big upward revisions in weak job creation this summer. The numbers support the greenback and underpin the Federal Reserve’s decision Wednesday to put dovish monetary stance on hold.
EUR/USD fell every day last week with the euro ultimately giving up about 150 pips against the US dollar by late afternoon New York trading on Friday. While technical analysts point to a EUR/USD bearish double top recently formed in the daily chart, it is interesting to note that EUR/USD dollar is still trading within the band of roughly $1.12 to $1.10, closing Friday around $1.1020, that has characterized the market since early October.
Key euro $1.10 support holding
That the greenback did not blast through $1.10 EUR/USD level – considered critical by Elliott Wave analysts – is instructive. The greenback failed to do this despite the sea change in attitudes about the US economy that occurred last week – consensus is now no recession vs consensus recession quite possible. And forecasts that the Federal Reserve will continue easing have been quashed.
Such a quick and decisive change in views on the US economy and monetary policy are rare and should perhaps have led to more EUR/USD volatility last week, with possibly a much stronger greenback move. Instead trading was orderly with a steady and measured US dollar move higher.
As has been the case, EUR/USD at $1.10 is the key level. If the euro can hold there it’s a much better case for EUR/USD to move higher despite the strong positive carry bias for the greenback. If the US dollar can breach $1.10 decisively it will be very difficult for the euro bulls to recover and the greenback will likely continue its push toward the four-year high of $1.05 that began nearly two years ago.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.