On Friday, October 15, by the end of the day, the euro rose in price against the dollar by 0.04%, to 1.1602. The growth of the pair was limited by the level of 1.1620. The buyers were pressured by the fall of the EUR / GBP cross-pair against the background of statements by P. Wunsch and K. Lagarde, at the American session - a strong report on retail sales in the US.
ECB spokesman Pierre Wunsch called the growing price pressure in the Eurozone temporary. He said: “The economy is on the right track. We have not yet reached our inflation target. There are unknown factors surrounding the effects of the second inflation. The ECB is quite flexible in terms of incentives. "
K. Lagarde, too, almost every day repeats the same thing - the jump in inflation is temporary. Earlier, FOMC members talked about temporary inflation, only because of the energy crisis, supply chain disruptions and labor shortages are already inclined to believe that inflation will remain at a high level for a long time.
The euro rate did not drop much on Friday, as it received support from the growth of stock indices. The European stock market posted good weekly gains in seven months. The reporting season helped ease investor fears about higher inflation. The STOXX 600 index rose 0.7%, and rose 2.6% over the week.
The British pound rose in price, reaching 1.3775 for the first time since mid-September. The sterling recovery was supported by rising risk appetite, the rise in major stock indices (good quarterly earnings reports in the financial sector), as well as rising expectations that the Bank of England may be the first of the largest central banks in the world to raise interest rates.
Bank of England Governor Andrew Bailey sent a new signal on Sunday that the UK central bank is preparing to raise interest rates for the first time since the start of the coronavirus crisis as inflation risks soared.
Scheduled statistics (GMT +3):
- At 12:30, FOMC Member Randal Quarles will deliver a speech.
- At 16:15, in the United States will be released a report with data on changes in industrial production for September.
- At 17:00, the US is to publish the NAHB Housing Market Index for October.
- At 17:30, the Bank of Canada will present a report on economic conditions and business development prospects.
- At 17:30, Deputy Governor of the Bank of England John Cunliffe will deliver a speech.
- At 18:40, Timothy Lane, Deputy Governor of the Bank of Canada, will deliver a speech.
- At 23:00, the US is to publish data on the volume of purchases of long-term securities in August.
Current situation:
As of this writing, the major currencies are showing mixed performance. The least of all is lost by the New Zealander. It got support from the 3Q inflation data.
The pressure on risky assets comes from weak data from China and the rise in the yield on 10-year US bonds. In China, September retail sales and Q3 GDP were below forecast.
Economic calendar for today is blank for euro. The direction of movement of major currencies determines the dynamics of the yield on 10-year bonds.
Technical analysis:
The euro fell to 1.1582. On the downward channel, support is located at 1.1575. The 45th degree passes below the 1.1570 level. If the price remains above the designated zone, then buyers will have a new opportunity to resume growth from Tuesday.
The worst-case scenario for buyers is a price return to the 1.1530 level. Here the market situation will depend on the dynamics of UST10 and the EUR / GBP pair. The cross at the daily TF broke through the key levels, therefore, with a further collapse, the EUR / USD pair will have to choose the southern direction.
Summary: on Friday, the euro closed slightly higher against the US dollar. Since the European session, the euro has come under pressure due to the collapse of the EUR / GBP cross pair. In the American session, the dollar strengthened its positions on the background of a strong report on retail sales and growth in the yield of 10-year bonds. In Asian trading, the euro is trading in the red due to rising UST10 yields. Support is the zone 1.1570-1.1575. The aim of buyers, to keep support, sellers is to lower the rate to 1.1530.