Statements made by representatives of the Federal Reserve System had a negative impact on the US dollar, which attempted to grow against the euro and the British pound yesterday afternoon.
The report on the number of Americans applying for unemployment benefits for the first time provided only temporary support for the US dollar. According to the US Department of Labor, the labor market is once again strengthening after a series of weak reports. Thus, the number of initial applications for unemployment benefits for the week from March 31 to April 6 decreased by 8,000 and amounted to 196,000. Economists had expected the number of new applications last week to be 210,000.
The speeches of the various representatives of the Federal Reserve System, who were scheduled yesterday, did not support the US dollar.
The head of the Federal Reserve Bank of New York, John Williams, believes that inflation is close to the Fed's target level of 2%, and unemployment is at historically low levels. Also, in his opinion, concerns about the slowdown in economic growth have weakened.
The president of the Federal Reserve Bank of St. Louis, James Bullard, does not agree with him. He noted that the Fed policy is now in the right mode, and we can safely say that the Fed has completed the process of its normalization. However, further actions of the Fed in relation to rates depend on the situation in the economy. Bullard recalled that the bond market continues to give a warning sign on the economy. We are talking about the inversion of the yield curve, which was clearly visible in the early spring of this year. The head of St. Louis also believes that the Fed will again not reach the target level of inflation this year.
Fed Vice Chairman Richard Clarida said in an interview that the economy is in good shape, but economic growth is slowing compared to 2018. In his opinion, the Fed will slow down the balance reduction in May and complete the reduction process in September. Let me remind you that this was first announced during a press conference by Fed Chairman Jerome Powell.
As for the technical picture of the EURUSD pair, despite the Asian growth, the prospects for further recovery remain a big question. For a more confident upward movement, a breakdown and consolidation above the resistance of 1.1300 are required, which will resume the trend and give it a boost, which will lead to updating of the highs around 1.1330 and 1.1390. If trade continues in the sideways channel, support will be seen in the area of 1.1260, but a larger level is located slightly lower, in the area of 1.1230.
The Canadian dollar is adjusted after yesterday's decline paired with the US dollar.
Data on the cost of new homes in Canada did not affect the market, as the fall in prices in large urban centers was offset by growth in other markets. According to a report by the National Bureau of Statistics of Canada, prices in the primary housing market in February 2019 increased by only 0.1%.
The material has been provided by InstaForex Company - www.instaforex.com