02.05.201810:01 Forex Analysis & Reviews: All attention to important US data

The US dollar continued its strengthening against the European currency in the afternoon on Tuesday, May 1. Demand remained on the background of good fundamental data, as well as before the meeting of the Federal Reserve System, wherein the regulator is expected to shed light on the timing associated with the next increase in interest rates.

According to the company IHS Markit, manufacturing activity in the US for the month of April this year continued to grow. This happened due to the growth in production volumes and new orders.

So, the index of business activity in the US manufacturing sector in April 2018 was at the level of 56.5 points against 55.6 points in March. Markit said that the US economy has successfully started the second quarter and may grow at a faster pace in the future.

However, the data on the growth in activity in the manufacturing sector in the US for the month of April slightly disappointed investors. According to the report of the Institute of Supply Management ISM, the index of supply managers for the US manufacturing sector in April fell to 57.3 points against 59.3 points in March. Economists had expected the index in April to be at 58.5 points. However, despite this, the index values above 50 indicate an increase in activity. New orders in April fell to 61.2 points, and the subindex of production fell to 57.2 points.

There are also some disappointment caused by a weak report on reducing costs in the US construction sector. According to the US Department of Commerce, construction costs in March 2018 decreased by 1.7% compared to the previous month and amounted to 1.285 trillion dollars. Economists expected that construction costs in March will grow by 0.5%.

As noted above, all attention today will be focused on employment data from ADP, as well as on the FOMC decision on the basic interest rate, which is likely to remain unchanged at 1.75%. What's more important will be the statements made after this. In them, investors will look for hints at more specific terms of interest rate increase in the future.

As for the technical picture of the EURUSD pair, the pressure may continue further on the risky assets. A breakthrough to the support level of 1.1990 will lead to a new wave of sales of the trading instrument with an exit on the next monthly lows at around 1.1940 and 1.1900. However, we should not forget that the euro has not had an upward correction for quite some time, and many indicators indicate a serious oversold. The return and consolidation at the level of 1.2025 could lead to the demolition of a number of stop-orders of sellers and a larger euro growth in the area of 1.2070 and 1.2110.