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Yesterday can be easily divided into two parts. Before the opening of the American session, everything was going exactly as it should, but then a general mess began. Indeed, the growth of the single European currency is quite justified, as the preliminary data on business activity indices came out much better, and without those bad forecasts. Thus, the index of business activity in the manufacturing sector remained unchanged, although it was expected to decline from 63.1 points to 62.2 points. The index of business activity in the service sector, which was supposed to grow from 55.2 points to 57.6 points, rose to 58.0 points. As a result, the composite business activity index rose from 57.1 points to 59.2 points, instead of the expected 58.9 points. So, this is quite a noticeable increase in the optimism of European business, and against this background, the growth of the single European currency should not come as a surprise.
Composite PMI (Europe):
But as soon as the American statistics began to be published, the single European currency immediately began to lose its positions, and it did it quite actively. Of course, the PMI in the manufacturing sector rose from 62.1 points to 62.6 points, although it should have dropped to 61.0 points. But the index of business activity in the service sector literally collapsed from 70.4 points to 64.8 points. It was expected to decrease to 69.0 points. In general, the composite business activity index fell from 68.7 points to 63.9 points, while the forecast was 67.0 points. Moreover, new home sales fell by 5.9%, much more than the expected figure. A decline of 2.1% was predicted. So, the American statistics can be described as terrifying. But the dollar was growing at the same time, which is rather strange. We can try to blame everything on the Federal Reserve System, but it still does not work, since none of yesterday's statements by the representatives of the American regulator said a word about monetary policy and the like. In all likelihood, speculators have again begun to dominate the market, who are of little concern for some kind of macroeconomic statistics. Investors are apparently still trying to figure out what to do next.
New Home Sales (United States):
At the same time, one should not think that everything will be normal today, since from the point of view of institutional investors, today's American statistics will not give any answers, which means that the question of what will happen in the future remains unanswered. Indeed, the number of initial applications for unemployment benefits should be reduced by 52 thousand, which seems to be not bad. However, repeated applications are of much greater importance, the number of which may increase by 2 thousand. That is, these remain unchanged. This means that the labor market has frozen in place, and it is completely unclear where it will move in the future.
Number of initial claims for unemployment benefits (United States):
During the last trading day, the European currency went into the stage of slowing down the corrective course after the area of the psychological value of 1.1950 / 1.2000 / 1.2050 was touched.
As for the market dynamics, there is a decline in volatility, which coincides with the period when the price touches the psychological area.
Based on the current location of the quote, an amplitude move will be seen just below the value of 1.1950, which indicates resistance.
Considering the trading chart on the scale of the daily period, there are fears of a change in the market cycle.
It can be assumed that the control area will continue to put pressure on buyers, where if the price is kept below 1.1905, a sequential process of recovery of downward interest in the direction of the pivot point 1.1850 is not excluded.
An alternative scenario of the market development will be considered in the event that the price is kept above 1.2010.
From the point of view of complex indicator analysis, it can be seen that technical instruments on the minute and hour periods have a variable signal - buy/sell, due to the amplitude movement of the price. The daily period, as before, indicates a predominant downward interest, signaling a sell.
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