2021-07-26 10:51:14
A busy week is fraught with serious fluctuations in EUR / USD.
God saves man, who save himself. While markets are confident that the delta variant of COVID-19 will not be able to hinder the recovery of the US economy, individual investors are starting to reinsure themselves. Net purchases of global bond funds accelerated to $ 8.4 billion in the week of July 21, according to BofA research; among stocks, inflows were in technology and healthcare. Reflationary trade goes backwards, and the Fed has a reason not to rush to withdraw monetary stimulus.
Despite the fact that in the second quarter, according to forecasts by experts from the Wall Street Journal, US GDP grew by 8.5%, exceeding the $ 19.2 trillion level that took place at the end of 2019; and the OECD believes that by the end of 2022 the US economy will be even larger than it could have been without a pandemic due to fiscal stimuli, it is too early to rest on its laurels. Recently, the statistics for the United States is more often disappointing than pleasing to the eye, which is reflected in the fall in the index of economic surprises and the yield of Treasury bonds.
Confirmation of the economy losing steam was the release of data on US business activity. The composite purchasing managers index fell short of the forecast of 63.7 and declined in July for the second month in a row. This time - up to 59.7, although it continues to be at high levels by historical standards. Europe, on the other hand, blooms and smells. Its PMI rose from 59.6 to 60.6. These are the best numbers in 21 years that have kept the EUR / USD from falling below the 1.1755 support.
In my opinion, statistics should not be misleading: firstly, most of the success is related to the service sector, while the manufacturing sector is slowing down; second, business expectations for the year ahead fell from an all-time high in June to a 5-month low.
In the same way that Delta and economic problems allow the ECB not to rush to withdraw stimuli, they can also strengthen the position of the FOMC "doves". The latter believe that the States are far from full employment, the surge in inflation is temporary, and the new strains of COVID-19 are uncertain.
Thus, while the calendar for the final week of July can create a tailwind for the US dollar, the reality is not that simple. Yes, the discussion of the issues of curtailing the American QE, the acceleration of GDP to 8.5%, as well as the continuation of the PCE rally whet the bears' appetite for EUR / USD. Nonetheless, the Fed has reasons to be patient, and the eurozone has a response to its competitor.
In my opinion, we have a very busy week ahead, so the EUR / USD pair is likely to be stormy. While its quotes are kept below 1.1825, the situation is controlled by the "bears" who are not averse to trying to organize another assault on the support at 1.1755 and bring the US dollar to the operational space. We continue to adhere to the sales strategy. A rise in the euro above $ 1.1825 will increase the risks of a rollback to $ 1.188. In this situation, after short-term purchases, we begin to look for an opportunity for shorts to bounce off resistance.
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