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04.06.201814:12 Forex Analysis & Reviews: Weekly review of the EUR/USD on June 4, 2018

Long-term review

The dollar, of course, continued to grow, but eventually finished the week at the same values on which it began. So we can say that its growth is at least paused. And all this despite the incredibly good report of the Ministry of Labor. The unemployment rate declined from 3.9% to 3.8%, and 223, 000 new jobs were created outside the agriculture sector. Moreover, the growth rate of the average hourly wage has accelerated from 2.6% to 2.7%. So the content of the text of the report was purely positive. However, the dollar failed to build on this success. This is largely due to preliminary data on inflation in Europe, which showed its acceleration from 1.2% to 1.9%. Given that the dollar is already overbought, even a hint that the ECB may abandon the idea of extending the quantitative easing program was enough to ensure that the dollar stopped growing. Also, market participants were disappointed with weak data on US GDP for the first quarter, as economic growth accelerated from 2.6% to 2.8%, and not to 2.9%, as previously thought.

Data on producer prices in Europe that were published showed a slowdown in their growth from 2.1% to 2.0%, although the acceleration was projected to be 2.4%. But this did not have any effect on the market, as market participants hope that inflation will affect the ECB's plans for a quantitative easing program. Moreover, the growth of retail sales is expected to accelerate from 0.8% to 1.7%, which, combined with inflation, greatly increases the potential profit of investors. Also, the final data on Europe's GDP in the first quarter should confirm the fact of a slowdown in economic growth from 2.8% to 2.5%. True, these data have long been priced in the value of a single European currency. In the US, there is no important data, and it is worth paying attention to the data on inventories in wholesale warehouses, which should grow by 0.6%. This can clearly be attributed to negative data, so the dollar has no special reason to continue its growth.

Thus, by the end of the week, the single European currency has good chances to grow to 1.1800 and, perhaps, a little higher.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Mark Bom,
Analytical expert of InstaSpot
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