Despite the previous gains of the greenback, the euro has managed to gain a sustainable momentum recently which is expected to lead to the further bullish movement of the pair, even though the eurozone is being affected by the economic slowdown.
The eurozone is currently looking forward to setting the trade talks with the United States releasing the pressure of Brexit after the delay till October was agreed. The European Union gave the green light to start the trade negotiations with the US to agree on trade tariffs between them. Negotiations are anticipated to start quite soon, though certain tensions on both sides are still there. Thus, the US has already accused the EU of not acting in good faith and delaying the talks. Recently, European Commissioner Pierre Moscovici spoke about the eurozone's budget noting that it needs to be more developed and realistic. Even though the first step has been already done, a proper budget which can withstand economic shocks is currently the biggest need of the European economy.
Ahead of the Flash Services and Manufacturing PMI reports from France, Germany, and the eurozone, this week is expected to bring positive results that may lead to further gains in the coming days if the expectations are met.
On the USD side, the Consumer Price Index for All Urban Consumers of the USA has increased by 0.4% in March on a seasonally adjusted basis after a rise of 0.2% in February. Notably, the all items index has increased by 1.9 percent before the seasonal adjustment over the last 12 months. In the FOMC minutes of the previous weeks, the FED discussed the options to end the reduction in the Federal Reserve's securities holdings by the end of September 2019. The Fed also expected the GDP to show a significant bounce in the second quarter of 2019 together with strong data from the Labor Market. Moreover, the further interest rate hike depending on the economic conditions was discussed as well. The unemployment rate was 3.8% in February, while the declining industrial production rebounded in the same month. The manufacturing output has also decreased during the last 2 months.
Today FOMC member Evans is going to speak about the further monetary policy and short-term interest rate decision. However, it is not likely to trigger any major changes in the US dollar's movement. The Empire State Manufacturing Index is expected to increase to 8.1 from the previous figure of 3.7. Ahead of Thursday's Retail Sales report which is expected to show a rise to 0.9% from the previous value of -0.2%, certain volatility and correction may take place, while meeting the expectation will lead to impulsive momentum on the greenback's side. Yet, it does not promise to be stable considering this week's economic reports.
Now, let us look at the technical view. The price is currently residing above the 1.1300 area with a daily close which indicates the further bullish sentiment in the coming days. It is likely to lead the price towards 1.1450 and then to 1.1500 resistance area. The bullish bias is expected to continue as long as the price remains above the 1.1200 area. On the other side, a breakout below 1.1300 with a daily close will slow the upward movement, but the sentiment will still be bullish.
The material has been provided by InstaForex Company - www.instaforex.com