In fact, the dollar has been losing ground over the past week, and the main driving force for this has been the development of the situation with the spread of coronavirus in the United States. Yesterday, the dollar resumed its growth, which was due to both fundamental economic factors and the same coronavirus. It's just that the really bad news, to a greater extent, began to come from Europe again. Not only has the number of confirmed cases of coronavirus infection in Italy exceeded 100,000, but Spain also took third place in this terrible anti-rating.
If we talk about purely economic factors, the growth rate of pending home sales in the United States increased from 5.8% to 9.4%. And not only that, the data turned out to be significantly better than the forecasts, which indicated a slowdown to 1.5%, but also the previous data was revised upwards from 5.7%. An increase in the growth rate of pending home sales transactions indicates a high potential for sales growth.
Unfinished Home Sales (United States):
Today, preliminary data on inflation in Europe will be in the spotlight, which should show a decrease from 1.2% to 0.7%. Such a rapid decline in inflation will undoubtedly intensify the talk about the need to reduce the refinancing rate of the European Central Bank. The very decline in inflation is clearly not optimistic. Moreover, as a result, the data may turn out to be slightly worse than forecasts, and inflation will slow down even more. This in particular is indicated by yesterday's data on Spain, where deflation is about to begin.
Inflation (Europe):
The S&P/CaseShiller data on housing prices in the United States will boost the dollar even more, since the growth rate of these prices can accelerate from 2.9% to 3.3%. In combination with yesterday's data on pending transactions, a picture emerges of a combination of both sales growth and price increases. Nearly perfect conditions. So really, the dollar will have a lot of reasons for growth.
S&P/CaseShiller (United States) Housing Price Index:
From the point of view of technical analysis, we see that after the upward movement, the quote reached the level of 1.1150, where it slowed down and, as a fact, was corrected to the area of the psychological mark of 1.1000. In fact, we last returned the quote to the measure of last Friday, where the pivot point coincided with the current value. Regarding volatility, we see that market activity still remains high, steadily exceeding 100 points.
In terms of a general review of the trading chart, we see that the quote has been in inertial fluctuations for two months now, where it is highly exposed to the external background.
We can assume a temporary fluctuation within 1.1000/1.1050, where in case of price taking lower than 1.0980, downward interest will resume in the direction of 1.0950-1.0900.
Concretizing all of the above into trading signals:
- Short positions, we consider in case of price taking lower than 1.0980, with the prospect of a move to 1.0950-1.0900.
- Long positions, we consider the form of alternative transactions in case of price taking higher than 1.1060, towards 1.1080.
From the point of view of a comprehensive indicator analysis, we see that the minute and hour intervals occupy a downward position against the background of the price returning to the level of 1.1000. Daily periods signal purchases due to an earlier upward move of more than 400 points.
