11.12.201710:39 Forex Analysis & Reviews: A correction is brewing for the euro

The euro continues its attempts to form an upward correction against the US dollar even against the background of good data on the US labor market while the British pound remains under pressure after quite successful negotiations on Brexit.

According to the report of the US Department of Labor, which was released on Friday, the number of jobs outside agriculture in November this year increased by 228,000 while the unemployment rate itself was 4.1%. Interviewed economists expected that the number of jobs will grow by 195,000, and unemployment will remain at 4.1% for the month of November.

Pressure on the US dollar come from a weak data on inventory in wholesale trade. According to the report of the US Department of Commerce, inventories in wholesale trade in October this year decreased by 0.5% compared with the previous month while economists expected that stocks will fall by 0.4%. Sales in October increased by 0.7% compared to the previous month.

Preliminary data on the mood of consumers in December this year indicate a not-so-encouraging trend. According to the report, the leading index of consumer sentiment at the University of Michigan was 96.8 points in early December 2017 compared to 98.5 points in November. In October, the index reached 100.7 points. Economists had expected that the preliminary index in December would be at 99.9 points.

The pressure on the US dollar this week may be directly related to the risks that may grow against the backdrop of discussion of tax reform. A decision on this must be taken in the US Congress this week. The House of Representatives and the Senate must agree and agree on all conditions for the reform if they want it to be accepted by the White House before the end of this year. If negotiations go well, then the US dollar can get good support this week and continue its growth against most other currencies.

As for the technical picture of the EURUSD pair, the upward correction in the trading instrument will depend directly on whether the buyers will be able to hold above the level of 1.1770 at the beginning of the week, which could lead to a reduction in long positions in the US dollar and euro growth in the area of 1.1810 and 1.1840. by the middle of the week. Meanwhile, the aim of the sellers is to keep the new monthly lows around 1.1715.

The British pound declined, despite the fact that the European Council, following the meeting, noted significant progress in the negotiations on Brexit. If permission is given to discuss trade agreements between the EU and the UK, this can provide substantial support to the British pound in the near future.