Yesterday (25/11), EUR/USD fluctuated before closing in the red. Ending the session, the pair closed at $1.06229, down 0.17% compared with the opening price $1.06414.
In early trading, the euro soared to $ 1.06881 threshold, the highest price and transaction date as well as highs since the beginning of the week. It is caused by the unrest, geopolitical escalation in the Middle East, especially after Turkey shot down by Russian fighters near the Syrian border, prompting investors to seek the safety of assets and currencies Yen and Euro perfectionist.
However, the Euro has turned down shortly after Reuters reported the European Central Bank (ECB) is considering options for easing next meeting in December. There are many choices for the ECB at the moment, like buying local bonds, expanding the asset purchase program, to lower interest rates … in order to boost the euro zone’s economy. Among them, particularly policies to charge two levels for bank deposits at the ECB. According to the Reuters, ECB officials were discussing the division ratio level, where banks have larger deposits ratio will be subject to higher fees.
This is seen as a move to remove the barriers and prepare for the banks before the ECB decided to cut interest rates. Therefore, the ability to perform easing ECB next week is strengthened, thereby pulling Euro discount.
Besides, the US also announced a series of economic data. Personal income rose 0.4% in October but growth in private consumption rose only 0.1% slower, lower than the expected figure of 0.3%, showing the American people tend to save more. Fed might not like this because the US economy is the consumer need a stronger force to promote domestic demand and inflation. Personal spending index core (core PCE) (excluding energy and food) index measuring inflation by the Fed-unchanged. On an annualized basis, this index was only 1.3%, far behind the inflation target of 2% of Americans.
However, the manufacturing sector is showing signs of recovery as orders for durable goods rose 3% in October, exceeding the forecast figure of 1.5%, the aviation sector orders also increased by 200% after airshow in Dubai. Meanwhile, the number of applications for unemployment benefits fell to its lowest level last month was 260,000 shares; much lower than the figures previously forecast 273,000 shares, contributing to a bright picture of the labor market.
Overall the US economic data have been mixed, but will not affect the expectations of Fed rate hike in mid-December meeting due to the employment and GDP figures positively the previous day. Scenario Dollar rose after US economic tightening continued to cause downward pressure on the pair.
Today the focus will be put on the European market due to the US Thanksgiving holiday. The confidence index of German consumer-largest economy in Europe will be GFK (Institute biggest market Germany) announced at 7:00 pm GMT+7.
Currently, at 15:10 pm GMT + 7, the pair is trading at $1.06070, down 0.15% compared to the closing price of $1.06229.
Forecast: In the long term, the Euro remains under pressure from the monetary policy of the Fed and ECB polarization. While the ECB is expected to strengthen the easing in its meeting on 3/12, the prospect of Fed tightening economic increasingly clear. Today the pair will not fluctuating, predict likely price dropped to $1.05500.
However, if the index of consumer confidence in Germany exceeded forecasts and contribute 9.2 offering signals of economic recovery the single currency area, the euro may be supported on the $1.06600.