15.11.201910:47 Forex Analysis & Reviews: EURUSD: Bears take profits after a two-week decline in the euro. The Fed is concerned about the US national debt

After several good fundamental statistics on the US economy and its ignoring by buyers of the dollar, an upward correction began in the EURUSD pair, which has been brewing for a long time. The unsuccessful attempts of the bears to continue the decline of the trading instrument below the level of 1.1000 also discouraged all the desire to hold it.

Data on a slight increase in applications for unemployment benefits in the United States last week was ignored by the market even although the number reached its highest in the last few months. Given the level of unemployment, this growth did not cause much concern.

According to a report by the US Department of Labor, the number of initial applications for unemployment benefits for the week of November 2 to 9 rose by 14,000 to 225,000. Economists had expected the number of applications to be 215,000. But the moving average for four weeks rose only by 1,750, to 217,000. Secondary applications for the week of October 27 to November 2 fell by 10,000 to 1,683,000.

Good data on US producer price growth also points to a gradual return of inflationary pressure, which is expected at the central bank. According to the report of the US Department of Labor, the producer price index in October of this year increased by 0.4% compared to September, while economists had predicted an increase of 0.3%. The increase was due to the rise in energy prices.

As for core inflation, which does not take into account volatile categories of goods, including energy, the PPI index in October rose by 0.3% compared to the previous month. Compared to October 2018, the index added 1.1%.

Yesterday's speech by the Fed chairman concerned the US national debt. In his view, the US debt is growing faster than the economy, which is by definition unacceptable, and ultimately, the US will have no choice but to put the budget in order. However, what actions the United States will take in this direction, Powell did not note, switching immediately to a trade conflict between the United States and China. According to the head of the Fed, despite the problems that occur in the economy, free trade relations are quite an important point. As for problems in the manufacturing sector, they are directly related to the trade conflict and weak global economic growth, which stems from the protectionist policies of the United States. However, according to Powell, concerns about the expansion of the recession of the manufacturing sector to the rest of the economy are exaggerated.

On Thursday afternoon, speeches by other representatives of the Fed also took place. For example, Richard Clarida in an interview said that the likely range of full employment is now 3.6% -4%, but a strong labor market still does not contribute to a large increase in salaries. Clarida is also confident that the current monetary policy regime is quite adequate, and in which case, the Fed has a flexible set of tools to cope with further difficulties.

As for the technical picture of the EURUSD pair, yesterday's growth completely negated the downward trend in the euro, which was observed for the second week in a row. Sellers of risky assets acted sluggishly around the psychological mark of 1.1000, which led to profit-taking on short positions towards the end of the week. Now it's up to euro buyers. The breakdown of the resistance of 1.1040 will provide them with a new wave of growth and will lead the trading instrument to highs around 1.1060 and 1.1080. Major support remains near this week's low at 1.0990.

Even good data on US retail sales will provide only temporary support to the dollar, which will allow major players to exit the market. Such a scenario will eventually lead to a more powerful upward correction of risk assets to the above targets.