After a surge to 94.5 points from 92.9 points, the US dollar index slowed down and got stuck. This week, the economic calendar has not been rich in events. That is why traders have to rely on the fundamental data (the level of anti-risk sentiments) and political events in the US. However, the news flow has become poor and all dollar pairs began to consolidate. Moreover, yesterday, the US reported on its labor market. The data turned out to be below the forecasts. This factor has also influenced the greenback. In other words, the US currency has lost momentum. Notably, on Fridays, traders close their positions ahead of weekends thus influencing currency pairs.
Under the current conditions, the market has shown rather high volatility this week. For example, the euro/dollar pair covered over 200 pips in five days. On Monday, the price was near the limits of the 19th pattern. At the moment, it is hovering within the 16th price level. Bears failed to push the price towards the limit of the Kumo cloud on a daily chart. They need additional informational impulse.
News about the approval of the long-awaited bill on additional assistance to the US economy could become such an impulse. Recently, US Treasury Secretary Steven Mnuchin hinted that the White House was consulting with congressmen to develop a bipartisan document that would be supported by both Democrats and Republicans in both houses of the US Congress. The greenback reacted very positively to this news, increasing its influence in all dollar pairs. Thus, if the US authorities implement the announced agreements, the US currency will again rise throughout the market, including in the pair against the euro.
This week, the House of Representatives approved a funding bill that will allow to avoid the government shutdown. The document was adopted before the deadline, that is before September 30, and sent to the Senate for the approval. Thus, it is hardly possible that the congressmen will come to an agreement concerning additional stimulus measures.
At the same time, yesterday, the White House National Economic Council director Larry Kudlow said that the US economy did not need another major package of emergency stimulus measures. In his opinion, the current measures are still useful and they do not need "another gigantic, multi-trillion-dollar package." After these words, the US dollar showed a significantly smaller rise. Notably, this is not the first time when Mnuchin and Kudlow have different views on the issue.
Today, the euro/dollar pair is likely to show weak performance amid an almost empty economic calendar. Traders may focus only on the US durable goods orders data that will be published during the US trading session. According to the forecasts, the indicator will show a smaller increase. In July, it jumped by 11%. In August, it is expected to inch up by 1%.
The market will hardly show high volatility after the publication of such weak figures. However, high volatility may take place if the indicator enters the red zone. From the technical point of view, the euro/dollar pair is trading in the Kumo cloud (on a daily chart) and on the middle line of the Bollinger Bands indicator that is located at the level of 1.1650. If the pair breaks the mentioned level, it may decline to the key support level of 1.1600 (a lower limit of the above-mentioned cloud).
A possible rebound could be limited by the upper border of the Kumo cloud that is located at the level of 1.1750. There, a stop loss order could be placed. However, short deals still prevail. The single currency is extremely weak after the ECB's comments about its exchange rate and prospects for the recovery of the eurozone economy. Moreover, a rapid spread of the coronavirus also affects the euro. Thus, tighter containment measures in the largest European countries have a negative influence on the recovery process. Besides, the most important macroeconomic indicators in Europe showed a significant slowdown. Thus, the euro does not have a trump card against the US dollar.
