Yesterday (14/01), EUR / USD fell even when jobs reports was disheartening. The pair fluctuated in a wide range between 1.07042 and $ 1.09421 $ before closing at $ 1.08615, dipped from the opening price of $ 1.08757.
The U.S Bureau of Labour Statistics also announced that the Unemployment Claims has risen by 7000 applications compared with the last week’s figure in 2015 while it was expected to drop by 2000 down to 275000. However, this does not damped the U.S dollar as the stock market rallied right after the selling off in 13/01 session. US stocks were supported after the chairman of Fed in St. Louis, James Bullard said that the on going trend of oil price will curb inflation as well as the outlook for another hike.
Expectation about another tightening from the meeting of FOMC on 26-27/01 is low so Mr. Bullard statement does not really affect speculators buying dollars and waiting for price to go up later.
In addition, the minutes of the ECB meeting on 3/12 ECB showed that it is ready to lower interest rate due to insufficient inflation. The 10 basis points drop in December which brought interest rate to -0.3% seems to has not satisfied the market. ECB president, Mario Draghi was criticized for being too conservative as along with 11 trillion euros assets purchasing program, no others was conducted. OPEC meeting on 4/12 also could not come to an agreement about output ceiling. To make the matter worse, demand continued to drop as China economy slowed down. Oil price has been falling since then and ECB’s already low inflation level seems to be more difficult to rise. Expectation for another easing depreciated sharply euro.
Yesterday, the pair surged largely due to technical causes.
Price once again hit resistance at $ 1.09420, this appeared to be a major resistance as it has acted as one in at least three sessions since since 21/12. After hitting this resistance, price turned and dropped sharply by 1012 points to the lowest level of the day at $ 1.8389 before rebound again at the session end.
The US dollar index, a measure of the greenback’s strength against the basket of six other major currencies, grew more than 0.4% to the highest level at 99.30 points before closing at 99.13 points.
Analysis of Group If24h