26.02.202009:24 Forex Analysis & Reviews: EUR/USD: The bullish movement of the euro is gradually slowing. The coronavirus can affect the interest rates in the United States.

Yesterday's data on consumer confidence in the US, as well as the decline in the manufacturing activity of the Federal Reserve Bank of Richmond, put pressure on the US dollar, which continued to decline against risky assets. Active purchases this week during the North American session have already returned the EUR/USD pair to the area of 1.0900, and allowed the pound to update the 30th figure.

s I noted above, the weak growth in US consumer confidence led to the closure of a number of long positions in the US dollar. It bounced even further from this year's highs. According to the report, compared to its 130.4 points in January, the consumer confidence index showed a weaker growth in February 2020, and was at the level of 130.7 points. Economists had expected the index to reach 132.6 points. The decline was due to a drop in the index, which measures consumers' assessment of current business conditions. It fell from 173.9 points in January to 165.1 points in February. Nevertheless, the Conference Board noted that despite the decline, most consumers consider the current situation as favorable. The main concern so far is the coronavirus epidemic, which will affect the world economy.

Meanwhile, the manufacturing activity within the area of responsibility of the Federal Reserve Bank of Richmond failed to please traders. According to the data, the production index was at -2 points, against its 20 points in January. All components of the index fell at once, and a particular decline was noted in the index of deliveries and new orders.

On the other hand, the data on the growth of house prices in the United States in December last year passed unnoticed by the market. According to the S&P / CoreLogic / Case-Shiller report, the national house price index rose by 2.9% compared to the same period in the previous year. In November, the growth was 2.6%. In addition, the average house price increased immediately by 3.8% compared to the same period in the previous year. Economists had expected the index to grow by 2.9%. The rise in prices, as well as the index, reflects high demand, which is associated with low interest rates, economic growth and the availability of mortgage lending for households.

The speeches made by the Fed representatives yesterday were of the same nature. Recently, the committee members have been sticking to the same statements, trying to avoid awkward questions about the future of interest rates. One thing is clear though, the situation with the spread of the coronavirus may affect the interest rates in the United States. At the first signs of slowing economic growth, the Fed may possibly ease the monetary policy.

During his speech, Fed spokesman Richard Clarida said that it is too early to say that the coronavirus epidemic will force the Central Bank to change its views on the interest rates. He described the situation in the US economy as good, noting that the course of the Fed's monetary policy is not predetermined and that the decision on its direction is taken separately within the framework of each meeting. As for inflation, Clarida drew attention to its symmetrical target level, which makes a deviation from the target level of 2.0% acceptable.

At the same time, his colleague, Robert Kaplan, believes that the Fed should take a wait-and-see position regarding the current uncertainty in the situation. According to him, there is no urgent need to think about the possibility of reducing rates, not until the next months, when the situation around the consequences of the coronavirus epidemic becomes clearer.

As for the technical picture of EUR/USD, the pair continues an upward correction. Fixing the price above the level of 1.0860 gives risky assets and their buyers a chance to continue growing in the area of the highs at 1.0930 and 1.0960. Meanwhile, the short-term downward correction will be restrained in the area of the lower border of the channel, which passes just above the low of 1.0835.