19.02.201809:05 Forex Analysis & Reviews: The weakening of the dollar may stop

On Friday, the US dollar gained strong support due to profit taking by investors after its weakening that began earlier in the week. On one hand, the factor of the long weekend played. Note that on Monday, due to holidays, the American market, as well as the markets in Hong Kong and China are closed. On the other hand, data on import and export price indices were published in the United States on the last day of the week. The figures were positive and together with the same strong figures in the volume of construction of new houses and a number of important indicators from the University of Michigan, they supported the dollar.

In accordance with the data presented, the import price index rose sharply by 0.8% against the forecast of an increase of 0.3% for the month of January. The export price index also rose strongly which was already at 1.0%, with only an expected increase of 0.6%. Last month, the volume of construction of new homes in the United States significantly exceeded expectations. It jumped by 9.7% against the previous value of -6.9% and the growth forecast by 3.4%. The figures from the University of Michigan are also indicators of strong growth. The February value of the consumer expectations index rose to 90.2 points against the expected decline to 84.5 points and the previous value of 86.3 points. The consumer sentiment index rose to 99.9 points against the forecast of decline to 95.4 points from 95.7 points.

So, on a wave of a combination of such factors, the dollar grew against all major currencies, with the exception of the Japanese yen. It seems to us that a new week may begin if not with the continuation of a noticeable growth of the US currency rate, then at least with its consolidation. Objectively speaking, we see no serious reasons for the weakening of the dollar under the influence of internal causes. It is most likely that the main negative for him is the expectation that the ECB and the Bank of England will change their monetary rates and other central banks, whose currencies are among the main ones, will already be drawn behind them.

Forecast of the day:

The EURUSD pair, pending the release of important data on inflation and production indicators this week, will consolidate today in the range of 1.2360-1.2510.

The GBPUSD pair is also likely to move in the range of 1.4010-1.4135 on Monday, in anticipation of new data on economic statistics and Brexit talks. However, if the price overcomes the 1.4000-1.4010 mark, then it may fall to 1.3835.