Yesterday, the majority of currencies, as well as commodities, incurred losses amid the strengthening of the US dollar. The greenback went up already at the very beginning of the European session. The American currency moved slowly but steadily. Therefore, it was too early to talk about a rally. But with the opening of the North American session, the greenback started to gain ground and its global growth became obvious. Under such circumstances, macroeconomic data did not matter.
Final business activity results in the United States came out lower from preliminary estimates. The services PMI fell 64.6 from a preliminary estimate of 64.8 and compared with 70.4 recorded in the previous month. The Composite PMI dropped to 63.7 from 68.7. The preliminary estimate was 63.9. Thus, the US macroeconomic statistics contradicted the events that took place in the market yesterday. The market was expected to react a bit differently.
United States Composite PMI:
Given what has happened, there is only one question: “Why did the greenback strengthen?” Overall, there is nothing surprising in that. After the outcome of the last FOMC meeting was announced, it became quite obvious that the US dollar was becoming bullish. Nobody expected that. Indeed, investors are determined to buy USD, but trends develop differently and present a smoother curve.
As we can see, there are too many questions than answers. However, it does not mean that that market has become unpredictable. Any trend is accompanied by countless bounces and corrections. Therefore, after such a sharp and impressive movement, a pullback may well occur. It is likely to be more moderate than the previous movement. We can expect the greenback to drop already today.
Moreover, job openings in the US are projected to decrease to 9,100,000 from 9,286,000. On top of that, we should not forget that the unemployment rate in the United States has risen. Thus, a decline in the number of job openings hints at a possibility of a fall in unemployment.
United States Job Openings:
The EUR/USD pair dropped sharply yesterday, losing around 0.70%. The price range of 1.1800/1.1815 still serves as a pivot point.
Market volatility is above average. An increase in speculation is still observed.
The current location of the quote indicates that the market is at a standstill. The price range of 1.1800/1.1815 serves as a pivot point.
Under the circumstances, we can assume that the market is still bearish. The volume of short positions is likely to increase after a breakout at 1.1800/1.1815.
Until the price consolidates below the indicated range, there is every likelihood of a rebound as it happened on June 2.
In terms of complex indicator analysis, technical indicators on M1 and H1 charts are giving a sell signal amid strong downside momentum.
InstaForex Group