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It often happens that macroeconomic data do not come out quite as expected. And that's exactly what happened on Friday. To be more precise, it was just like that all Friday. At the same time, as if by order, all this played to the dollar's advantage, which nearly engaged in appreciating all day. Although the tension in the market continues to persist. The dollar is still seriously oversold.
It all started with preliminary data on business activity indices in the euro area, which were supposed to come out somewhat multidirectional. But everything turned out to be much more interesting. In particular, the manufacturing PMI, which was supposed to rise from 51.8 to 52.6, unexpectedly dropped to 51.7. But the situation is much worse with the index of business activity in the service sector, which, according to forecasts, was to decline from 54.7 to 54.0. In fact, it literally collapsed to 50.1, approaching the psychological mark of 50.0. That separates stagnation from growth. Although there is growth in the service sector of the euro area, it is extremely insignificant, and there is a threat of a new recession. As a result of all this, the composite business activity index fell from 54.9 to 51.6 against the forecast of 54.3.
Composite PMI (Europe):
The picture is completely different in the United States, since the data came out significantly better than forecasts. And this despite the fact that the growth of the indices was already expected. Thus, the index of business activity in the manufacturing sector, instead of growing from 50.9 to 52.0, has grown to 53.6. The service business activity index, which was supposed to rise from 50.0 to 51.5, literally surged to 54.8. Given that the services industry has a much higher weight, it is not surprising that the composite PMI jumped from 50.3 to 54.7. And this despite the fact that the projected growth to 51.7. But besides this, data on home sales in the secondary market were also published, which also exceeded all the wildest expectations. Indeed, even according to the most optimistic forecasts, sales should have grown by 14.7%, and clearly no one expected their increase by 24.7%. In absolute numbers, sales increased from 4,700,000 to 5,860,000, reaching the highest value in the last twelve months. That is, even surpassing the values that were before the start of the coronavirus pandemic.
Macroeconomic data will not be published today, and in theory, given the continuing overbought nature of the euro, we should see its further weakening. However, there is a high probability that even if this happens, the decline itself will be symbolic. Many of the reasons that led to a significant weakening of the dollar have not gone away. So investors do not intend to take risks for no particular reason. In other words, until there are serious reasons to strengthen the dollar in the form of macroeconomic statistics or reduce political risks, largely related to the upcoming presidential elections, there is no need to talk about any noticeable strengthening of the dollar.
The euro/dollar currency pair continues to move along the trajectory of the 1.1700/1.1900 side channel, where this time the quote managed to settle below the average level of 1.1800. Holding the price at the previous coordinates may signal ambiguity in the actions of market participants, which may lead to further price fluctuations along the existing trajectory.
Relative to market volatility, high indicators are recorded, which leads to speculative hype, which is confirmed by candle analysis on minute and hour periods.
It can be assumed that consolidating the price below the average level of 1.1800 indicates a prevailing downward interest, which can become a reference point in the movement of 1.1800 - - - > 1.1700. At the same time, we should not rule out a temporary stop along the 1.1800 level, where the amplitude boundaries are already available on the market at 1.1780/1.1825.
From the point of view of complex indicator analysis, it can be seen that the indicators of technical instruments at minute intervals have a variable signal due to price fluctuations along the average level. Hourly and daily periods signal a sale.
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