On Friday, the dollar is strengthening across the entire spectrum of the market. The dollar index has risen by 0.3% since the beginning of the day. Among the G7 currencies, CAD, AUD and JPY showed the greatest decline against the US dollar, -0.27%. The most resilient is the British pound sterling with -0.05%. The EUR / USD pair slipped by 0.13%.
The market is afraid of the prospects for the development of the global economy amid the ongoing COVID-19 pandemic. Experts are hastily revising their forecasts for 2021 downward. US GDP growth data released yesterday showed that the world's largest economy contracted by 3.5% in 2020. This is the largest decline since 1946, when World War II ended. Investor interest in risky assets is declining, while demand for the US currency, which many traders see as a defensive asset, is growing.
Additional pressure on the euro continues to be exerted by verbal interventions by representatives of the ECB. Yesterday Martins Kazaks once again noted the readiness of the ECB to lower interest rates in the event of a worsening economic situation. At the same time, he noticed that at the moment this is not necessary. Another ECB representative, Olli Rehn, said that the regulator continues to closely monitor the development of the situation in the foreign exchange market.
In the economic calendar today, it is worth paying attention to statistics from Germany. It is expected to publish data on the labor market and preliminary indicators on GDP growth for the 4th quarter. Germany's annual GDP is expected to shrink by 3.4% in 2020, against -3.9% in the third quarter.
In the US, the focus will be on personal consumption price index data and a report on pending real estate sales.
The bearish signals still prevail on the chart. The upward corrective movement was choked already at the first significant resistance level. Today we are expecting a decline in quotations under 1.2050.
The main scenario is a decline below 1.2050.
Alternative scenario - breakdown of resistance at 1.2135 and recovery to 1.2175.
The current fundamental outlook is negative. We consider shorts on a pullback to levels 1.2105 and 1.2135.
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