The EUR / USD pair is trading with a slight decline on Friday, which is primarily due to the recovery of the dollar index (+ 0.06%). Investors continue to win back the macroeconomic statistics from the US published the day before and the Fed's statements on Wednesday.
Unexpectedly strong preliminary data on US 1Q GDP was partially offset by weaker weekly labor market report. Nevertheless, the main economic indicators in recent years indicate an improvement in the situation in all areas, so investors continue to bet on the rapid recovery of the US economy in the 2nd half of the year. In part, these expectations offset the soft tone of the Fed's statements, thanks to which the dollar retains its current position in the market.
High rates of economic recovery, positive dynamics of the labor market and rising inflation in aggregate will exert quite strong pressure on the Fed to tighten monetary policy. Therefore, the positive data of macroeconomic statistics, despite the Fed's statements, will have a positive impact on the dollar.
Today investors will be watching the publication of the price index for personal consumption expenditures. This is one of the important indicators of inflation that the Federal Reserve is guided by when making decisions on monetary policy.
A large block of important statistics will also be published in Europe today. The focus will be on preliminary data on German GDP for the 1st quarter and preliminary data on the consumer price index. Recently Vice President of the ECB Luis de Guindos said that by the end of the year inflation in the EU may exceed 2%, as the ECB expects a sharp increase in activity in the 2nd half of the year.
A pullback movement is developing on the chart. With a very high probability, today the price will update the yesterday's low of the trades. Further dynamics of the movement will depend on whether the bears manage to gain a foothold below these levels or not. A false breakdown of the level 1.2100 will be a good signal for the continuation of the upward movement and the end of the trading week above the level of 1.2150. Fixation below 1.2100 is a signal to continue the correction to 1.2050.
The main scenario is a false breakout of 1.2100 and a rise above 1.2150.
An alternative scenario - consolidation below 1.2100 and falling to 1.2050.
The current fundamental background is neutral. We are looking for buy signals in the area of the 1.2100 level.
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