After the growth during the Asian session on Tuesday, the dollar again began to decline at the beginning of the European session. As the data published at 10:00 GMT by Eurostat showed, the Eurozone GDP growth in 2017 was the fastest in the last 10 years (+ 2.5% vs. + 1.8% in 2016).
The index of consumer confidence in the Eurozone in January rose to 1.3 against 0.5 in December. The index of business optimism in the industry of the Eurozone in January 8.8, in the service sector 16.7 against 18.0 in December. The Eurozone economy demonstrates excellent growth rates, and the high level of consumer confidence in the Eurozone also indicates economic growth and strengthens the euro.
At the beginning of the European session, data on France's GDP were published, and according to the French national statistics agency Insee data, the GDP of the second largest economy of the Eurozone in 2017 grew by 1.9% compared to the previous year. The growth rate of the French economy accelerated sharply in 2017. The GDP of France has shown the most significant increase since 2011. The improvement of the economic situation in France was promoted by the policy of the European Central Bank aimed at stimulating the country's economy, as well as increasing consumer confidence caused by the election of Emmanuel Macron as French president. Macron spoke during his election campaign for France's further membership in the European Union and the strengthening of economic rapprochement with Germany. His convincing victory speaks of the centripetal sentiment of French citizens towards the European Union. Companies and investors have favorably taken steps to reduce taxes and eliminate bureaucratic obstacles. The revival of the French economy contributed to the growth of the economy of the entire monetary block to the highest level since 2007.
On the day when the results of the second round of elections in France became known, where the pro-European politician Macron won the victory, the euro rose sharply. This day (May 7) can rightfully be considered the starting point for the confident growth of the euro and the EUR / USD in the second half of 2017.
The data published today confirm the fact that the European economy is growing at a faster rate than the US economy.
This once again can remind investors that other major world economies outside the US are expected to grow faster, which may contribute to a more aggressive monetary policy of world central banks. All this together can contribute to the accelerated strengthening of national currencies against the dollar.
Meanwhile, the recent contradictory statements by officials and the actions of US authorities, including US President Trump, only exacerbate the negative attitude of investors towards the dollar.
So, last Thursday, after the statement of US President Donald Trump that the US currency should be "strong", the dollar grew. A day earlier, US Treasury Secretary Stephen Mnuchin said the opposite, dropping the dollar to a new three-year low.
During the economic forum in Davos, Trump again threatened to take action against trading partners. This time he hinted at a possible response to the "very unfair" EU trade policy against the United States. "I have a lot of problems with the EU," Trump said in an interview with the British media. Earlier, Trump had repeatedly said that multilateral trade agreements discriminated against the US. He threatened to take action. All this causes concern of investors in connection with the probability of imposing restrictions on trade and unleashing the world trade war. In January, the administration of the White House has already imposed such restrictions on the importation into the United States of a number of goods produced in Asian countries.
This week, the focus of traders will be the Fed meeting and the publication on Friday of data from the US labor market. On Wednesday (19:00 GMT) the Fed will publish decision on monetary policy. It is expected that the interest rate will remain unchanged at 1.5%. Monthly data on the number of jobs outside of US agriculture, the unemployment rate and hourly pay for Americans will be published on Friday at 13:30 (GMT). Strong data are expected. Nevertheless, they are unlikely to be enough to deploy a strong bearish trend of the dollar.
*)An advanced fundamental analysis is available on the Tifia Forex Broker website at tifia.com/analytics
Support levels: 1.2360, 1.2330, 1.2200, 1.2100, 1.2060, 1.2000, 1.1920, 1.1790, 1.1735, 1.1680
Resistance levels: 1.2430, 1.2500, 1.2535, 1.2600, 1.2650
Sell Stop 1.2350. Stop-Loss 1.2440. Take-Profit 1.2330, 1.2200, 1.2100, 1.2060, 1.2000, 1.1900, 1.1855, 1.1790, 1.1735, 1.1680
Buy Stop 1.2440. Stop-Loss 1.2350. Take-Profit 1.2500, 1.2535, 1.2600, 1.2650
*) For up-to-date and detailed analytics and news on the forex market visit Tifia Forex Broker website tifia.com