EUR analysis 12.02.2020

The single currency fluctuated the euro in a narrow range slanting back down during the Asian session to witness its stability near its lowest since the beginning of October, when it tested the lowest since 12 May 2017 against the dollar on the cusp of developments and economic data expected today Wednesday by the economies The Eurozone and the US economy, which includes the activities of the second half of Federal Reserve Governor Jerome Powell's testimony before Congress.

At 04:51 am GMT, the euro against the US dollar fell 0.03% to 1.0913 levels compared to the opening levels at 1.0916, after the pair achieved its lowest level during the trading session at 1.0912, while achieving the highest at 1.0921.

Markets are looking for euro zone economies as a whole to disclose data on the industrial sector with the release of a seasonally adjusted reading of the industrial production index, which may reflect a 1.8% decline against a rise of 0.2% last November, while the annual reading of the same indicator may show a widening decline to 1.9% Compared to 1.5% in the prior annual reading for November.

Other than that, yesterday we followed the talk of European Central Bank Governor Christine Lagarde about the European Central Bank’s annual report to the European Parliament in Strasbourg, through which it expressed that the side effects of monetary policy expand over time and that monetary policy cannot become the main driver in the markets , Explaining that the longer the facilitative monetary policy is extended for a longer period, this will have an expanded negative impact.

On the last level, investors are currently looking for what will be revealed by the speech of Federal Open Market Committee member and Chairman of the Federal Reserve Bank Patrick Harker about the economic outlook in the state of Pennsylvania, before we witness the activities of the second half of the semi-annual testimony of the Governor of the Federal Reserve Jerome Powell Cash before the Senate Banking Committee.

This comes hours after the Federal Reserve Governor Powell delivered on Tuesday the first half of his semi-annual testimony about monetary policy before the Financial Services Committee in the House of Representatives, through which he expressed the fact that the current monetary policy of the Federal Reserve is appropriate and that inflation is expected to rise to the goal of the Federal Market Committee Open at two percent in the next few months with his statement that core inflation is at 1.6 percent.

Powell also noted yesterday that the Federal Reserve began facilitating monetary policy to support the economy since the second half of last year, and that the current monetary policy supports growth and contributed to improving conditions in the labor market in addition to supporting the growth of inflationary pressures towards the goal of the Federal Committee, adding that the Federal Reserve places in Considering that reducing interest on federal funds more broadly limits its ability to act at the time of an economic recession.

Powell reiterated, within his testimony before Congress, his expectations that the Federal Committee would go ahead in purchasing bonds during the second quarter of this year and that the repo rate will remain active in the markets until next April at the very least, and we would like to point out that many market analysts believe that the reserve operations The Federal Reserve is a form of quantitative easing that is left untouched, while the Federal Reserve refuses to call a quantitative easing on what it does.

In another context, Powell mentioned the Corona virus, which killed more than a thousand people, mostly in China, specifically in the city of Wuhan, which Corona started, where he asked whether the impact of the deadly virus on China and the United States is temporary or permanent, explaining that it is too early to talk about The extent of its impact on his country's economy, adding that the Federal Reserve will closely monitor developments related to the virus, which may affect global supply chains, including America.

It is reported that US President Donald Trump tweeted yesterday on his official account on Twitter during Powell's testimony before Congress, "The interest on federal funds is very high and the US dollar is putting pressure on exports". Otherwise, investors are now looking by the US economy for the Treasury to reveal the Federal Budget reading That could reflect the deficit shrinking to $ 10.7 billion, compared to $ 13.3 billion last December.

Technical analysis

The EURUSD pair presented additional negative trades yesterday and approached our awaited target at 1.0860, noting that the stochastic indicator lost its positive resolve to show clear saturation in the purchase, waiting for price stimulus to resume the bearish bias whose targets extend to 1.0760 after exceeding the first goal.

In general, we will continue to favor the bearish trend for the next period unless the price rushes to breach the 1.1010 level and stability above it.

The expected trading range for today is between 1.0830 support and 1.0980 resistance.

Expected trend for today: bearish.