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Deal of the week: buying or selling euros?

DATE OF PUBLICATION: 2021-02-22 18:50:27 Euro continues to trade on Monday in a positive way, strengthening the gap with the dollar. Earlier, weak data on the number of jobless claims in the US helped the main Forex pair to consolidate around the 1.21 mark. Another weak report increased the likelihood of imminent support measures, which could lead to a long-term weakening of the dollar. Statistics from the euro zone went to the euro’s favor. Judging by the latest publications, the situation in the Old World is not as hopeless as it might have seemed earlier, and confident industrial growth may become a leading indicator of a faster recovery of the European economy compared to other developed countries of the world. Today, another portion of strong data from the region added a positive boost. The business climate index in Germany rose to 92.4 points in February from 90.3 points in January. Meanwhile, the markets were counting on an increase in the indicator to only 90.5 points. In addition, the index of the current economic situation in the largest economy of the Euroblock increased in the reporting month to 90.6 points, while the forecast assumed the indicator at 89 points. For the euro, this is a moderate, but still positive factor. In the coming days, traders will be watching Jerome Powell’s speech in Congress, which is expected to confirm the Fed’s commitment to a softer monetary policy. Powell may urge Congress to expedite the adoption of new economic aid. In such a scenario, the pressure on the dollar will increase, which will certainly be used by risk buyers, including the euro. Thus, the “bullish” dynamics of the euro will continue this week. The fact that there is still no demand for dollars from banks is in favor of the euro. The three-month Libor rate on the interbank market in London is near a historic low, which is bad for the American currency. The “bullish” trend for the euro is strengthening, which suggests an increase in the EUR / USD pair to the area of ​​1.2173 and 1.2300. It is worth noting that such a scenario requires stability above 1.2060. Not all market strategists are following the euro bullish scenario this week. RBC recommends selling the euro against the dollar with a target of 1.1900 and a stop at 1.2220. Rising Treasury yields and weaker equities could push the US currency higher. “In the short term, if higher yields cause further disruption of the uptrend in the stock market, expect the dollar to be the beneficiary of these changes,” strategists write. The British pound holds higher on Monday marks 1.40. However, a slight correction is not ruled out further. This is due to the fact that there is often a pullback in the market after a positive week. Not adding optimism and the reduction of the Fed on Monday in the volume of transactions in the Treasury bond market by five times. However, traders are likely to buy back drawdowns and will not allow the pound to roll back too much down against the dollar. Why? Because the balance sheet of the US Central Bank expanded by as much as $ 115 billion last week. The balance has renewed its historical maximum, which is negative for the US dollar. Material provided by InstaForex – Source – InstaForex

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