10.01.201810:19 Forex Analysis & Reviews: Pressure on the euro decreases

The demand for the US dollar slowed near a rather interesting level of support in the EURUSD pair and it is likely that a downward correction in the trading instrument, which we have seen since the beginning of this year, may end in this range.

The data to reduce the optimism of small business owners in the US also affected the quotes of the US dollar.

According to the report of the National Federation of Independent Business, the index of small business optimism in the US declined in December 2017 to 104.9 points against 107.5 points in November. However, compared with the same indicator in 2016, the index has grown significantly.

It is possible that traders drew attention to the speech of Fed representative Neel Kashkari, who said that everything is going well in terms of reducing the balance of the Central Bank. However, he, like his colleagues, once again drew attention to the fact that the main risk for the economy is inflation which remains very low.

In this regard, it is necessary to pay close attention to subsequent increases in interest rates since it is the soft monetary policy that will promote the growth of wages and inflation in the future. The representative of the Federal Reserve also expressed concern over the recovery of the US economy which is currently at a slow pace.

As for the technical picture of the EURUSD pair, everything will depend on the support level of 1.1915-1920, which was formed yesterday afternoon. If sellers of the euro manage to overcome this range, it is likely that the downward trend will resume which will automatically lead to the renewal of new monthly lows around 1.1870 and 1.1830. If buyers of risky assets today manage to stay above the range of 1.1915-1920, then the demand for the euro will increase. This will lead to a larger upward trend with a return to the level of 1.1970 and 1.2000.

Data on the growth of inflation in China slightly affected the quotations of commodity currencies, since the growth that occurred was rather insignificant

According to the report of the National Bureau of Statistics, China's consumer price index in December 2017 increased by 1.8% compared to the same period of the previous year after growing by 1.7% in November. Economists had expected the general consumer price index to be at 1.9%.

The main pressure on the index was created by prices for food products, which in December decreased by 0.4% compared to the same period of the previous year, after a decrease of 1.1% in November. Prices for non-food products increased by 2.4% compared to the same period of the previous year, after growing by 2.5% in November.