The very expectation that the European Central Bank will lower interest rates is already putting serious pressure on the single European currency. Investors understand that Christine Lagarde has no choice now, and on March 12, either the deposit rate or the refinancing rate will be reduced. Thus, it is clear that such a prospect does not inspire anyone.
Against this background, any macroeconomic statistics loses all meaning, and no one pays attention to it. This is exactly what happened with business activity indexes in Europe, and after all, the index of business activity in the services sector increased from 52.5 to 52.6, and the composite index, from 51.3 to 51.6. However, the single European currency stubbornly went down.
The same thing happened during the publication of retail sales data, the growth rate of which remained unchanged. But, in fact, we need to talk about accelerating growth, as the data for the previous month were revised upward, from 1.3% to 1.7%. At the same time, it was predicted that the growth rate would be 1.4%, but it turned out to be 1.7%. In other words, all macroeconomic statistics in Europe were positive. However, with the expectations of lowering interest rates, no one cares.
Retail Sales (Europe):
Similarly, no one also cares about lowering business activity indices in the United States. Although they declined below the level of 50.0 points, that seperates growth from stagnation. In particular, the index of business activity in the services sector decreased from 53.4 to 49.4, and the composite index from 53.3 to 49.6. And what is much more important, as the change in employment from ADP, which increased by 183 thousand against 209 thousand in the previous month.
Consequently, the growth rate of employment is slowing down, which means there is the prospect of a worsening situation on the labor market. This is ahead of the publication of a report by the United States Department of Labor. Still, the dollar won back this unpleasant fact even before the announcement of an emergency reduction in the refinancing rate; due to this, it has nowhere to decline. Moreover, the market switched to the prospect of lowering interest rates in Europe.
Composite Business Activity Index (United States):
The single European currency will most likely be under pressure, at least until the upcoming meeting of the European Central Bank. And this plays into the hands of the dollar, since forecasts on American statistics are not expected to be positive. So, the total number of applications for unemployment benefits may increase by 5 thousand.
In particular, the number of initial applications may increase by 1 thousand, and repeated applications by another 4 thousand. In addition, the volume of factory orders should be reduced by 0.3%, which casts doubt on the prospects for the restoration of industrial production.
Factory Orders (United States):
From the point of view of technical analysis, we see that external noise led to a slowdown of the inertial course, where the quote formed the time limits of 1.1100 / 1.1180. In fact, we see a kind of flat where the quote is still at the top of the inertial move, which means that the characteristic overbought is maintained on the market.
In terms of a general review of the trading chart, we see that the upward movement has a value of more than 400 points, where the quote found a variable resistance in the face of the conditional maximum of the oblong correction of 1.1180 / 1.1230, a period earlier.
It is likely to assume that the fluctuation within the set boundaries of 1.1100 / 1.1180 will continue in the market, where the main tactic is to identify a future correction that will lead to the restoration of the quote relative to the inertial course.
Concretizing all of the above into trading signals:
- – Long position are considered in case of price fixing higher than 1.1150, in the direction of 1.1180.
- – Local short positions are considered in the case of fixing the price lower than 1.1120, in the direction of 1.1100. We consider the main positions after fixing the price lower than 1.1080.
From the point of view of a comprehensive indicator analysis, we see that due to a temporary flat, the indicators of technical instruments in the minute and hour periods became unstable, with varying interest. At the same time, daily time periods still retain the ascending signal, due to a given inertial course.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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