On Wednesday, November 17, by the end of the day, the euro closed at Wednesday's level. A small minus of 0.01% was recorded. In the American session, the euro fell to the level of 1.1263, from which the price bounced to the level of 1.1332 (+68 rubles). Strengthening of the euro was subdued due to the decline in the EUR/GBP cross pair.
The Briton received support after the release this morning of strong inflation data in the UK. In October, the CPI index rose to 4.2% against 3.1% a month earlier. The data strengthens market expectations that the Bank of England may raise rates in December.
Major currencies were also helped by falling yields on 10-year bonds. Representatives of the US Federal Reserve, as well as representatives of the ECB, expect inflation to decrease in 2022. We took Lagarde's tactic of weakening the dollar so that debt servicing was not expensive.
Scheduled statistics (GMT +3):
- At 16:00, Rafael Bostic, President of the Federal Reserve Bank of Atlanta, will deliver a speech.
- At 16:30, Canada is to publish a report on changes in the number of employees (excluding agriculture) according to ADP data for October, as well as data on securities purchases for September.
- At 16:30 in the United States will be released the manufacturing index of the Federal Reserve Bank of Philadelphia, the number of initial jobless claims on November 5-12.
- At 17:30, John Williams, President of the Federal Reserve Bank of New York, will deliver a speech.
- At 18:00, the US is to publish the Conference Board's leading indicators index for October.
- At 22:00, President of the Federal Reserve Bank of Chicago Charles Evans will deliver a speech.
- At 23:30, San Francisco FRB President Mary Daly will deliver a speech.
Current situation:
As of this writing, the major currencies are showing mixed performance. The highest yield is shown by the New Zealand dollar. It strengthened after the publication of inflation data. The expected 2-year inflation in New Zealand was 2.96% versus 2.27% earlier. Experts say that on such data the RBNZ will raise the rate by 25 bp. November 24.
Rafael Bostic, Charles Evans, John Williams and Mary Daly are performing today. Bostic will talk about regional perspectives ahead of Metro Atlanta Chamber's 162nd Annual Meeting. Evans will discuss current economic conditions and monetary policy in a moderated Q&A at the BKD Financial Services Symposium. Williams attends Fireside Chat: New Strategies for the Federal Reserve and the ECB - Implications for Monetary Policy. Mary Daley attends the Fed Listens 2021 virtual event: Pandemic Recovery and the role of Care Work
Technical analysis:
The euro is worth 1.1319. The price recovered by 67 gr. from the low of 1.1263. The price is near the balance line (SMA55). There are many speakers today, but they shouldn't have a big impact on the market. The dollar index also corrected to the balance line.
Market participants are waiting for a new piece of information. If the euro maintains its sideways dynamics before the American session, then there is a possibility of the continuation of the recovery to 1.1382. Here you need to monitor the dynamics of the EUR/GBP pair. The cross has reached important levels at any time and can enter a correction phase. The growth of the cross is the support of the euro against the dollar. A pinbar has formed at the daily TF, therefore, the probability of the continuation of the recovery remains high.
If the yield on 10-year bonds turns up sharply and purchases of the dollar in major pairs resume, then the EUR USD pair may quickly slide to the level of 1.1290.
Summary: on Wednesday the euro closed practically unchanged. The rebound from the low of 1.1263 occurred due to technical factors after breaking protective stops on long positions. Positive statistics in New Zealand and Britain supported the national currencies. The New Zealander and the British are pulling other currencies up with them. If the euro maintains its sideways dynamics before the American session, then there is a possibility of the continuation of the recovery to 1.1382.