01.03.201810:06 Forex Analysis & Reviews: The buyers of the euro are scared

The second estimate for the growth of the US economy may as well have scared US dollar buyers on Wednesday afternoon after the breakthrough of important technical support levels after the growth of GDP in the fourth quarter of 2017 was slightly weaker than expected.

According to the US Department of Commerce, the economy in the fourth quarter of last year increased by 2.5% per annum, whereas according to the first estimate, the growth was at 2.6%. Economists had expected that the revised data will increase by 2.5%.

As noted in the report, the decrease in valuation was mainly due to a fall in investment. Compared to the same period of the previous year, GDP growth was 2.5%.

The decline in the Chicago Purchasing Managers Index also did not inspire investors. According to the MNI Indicators, the index of purchasing managers PMI Chicago for the month of February this year fell to 61.9 points against 65.7 points in January. It is important to note that the index value above 50 indicates an increase in activity.

The indicator of sales in the secondary housing market also decreased. According to the report of the National Association of Realtors, the index of signed contracts for the sale of housing in the US in January 2017 fell by 4.7% compared to the previous month and amounted to 104.6 points. Economists had expected sales to grow by 0.5%. Compared to the same period of the previous year, the index fell in January by 3.8%.

The speech by Fed representative Neel Kashkari slightly affected the market.

Kashkari noted that the Central Bank has the opportunity to postpone the increase in rates but the Fed should wait for the acceleration of wage growth and the increase of the inflation rate before taking action.

It is also important to note that Neel Kashkari is a supporter of low interest rates and last year, he spoke against their increase. This year, he has no right to vote in the FRS Committee on open market operations.

Today, Fed Chairman Jerome Powell will again speak. His speech at the beginning of the week led to a sharp rise in the US dollar. In this regard, it is necessary to pay special attention to his statements today.

As for the technical picture of the EURUSD pair, much will depend on whether the sellers of the euro decide on new actions or not. This will be indicated by the level of 1.2215. A breakthrough at this level can bring back a number of speculative buyers to the market. These market participants quickly poke the trading instrument to the limits of the resistance level of 1.2250 and 1.2300. It is likely that it is from these levels that large sellers will return to the market, putting on a renewal at the area of 1.2120 and 1.2060.