Site map
العربية Български 中文 Čeština English Français Deutsch हिन्दी Bahasa Indonesia Italiano Bahasa Malay اردو Polski Português Română Русский Srpski Slovenský Español ไทย Nederlands Українська Vietnamese বাংলা Ўзбекча O'zbekcha Қазақша

InstaForex Client Area

  • Personal settings
  • Access to all InstaForex services
  • Detailed statistics and reports on trades
  • Full range of financial transactions
  • System of managing several accounts
  • Maximum data protection

InstaForex Partner Area

  • Full information on clients and commissions
  • Graphic statistics on accounts and clicks
  • Webmaster instruments
  • Ready-made web solutions and wide range of banners
  • High data protection level
  • Company's news, RSS feeds, and forex informers
Register account
Affiliate Program
cabinet icon

Another Lamborghini from InstaForex!Maybe it will be you who will take the keys!

Just make a deposit of at least $1,000 to your account!

Get the best trading conditions and attractive bonus offers! We have already given 6 legendary sports cars! But it does not stop there! The next Lamborghini Huracan of the latest generation may be yours!

InstaForex – invest in your victories!

Instant account opening

Get a letter of instructions
toolbar icon

Trading Platform

For mobile devices

For trading via browser

The results of the September meeting of the ECB overshadowed the remaining fundamental factors relevant to the euro-dollar pair, particularly the data on the growth of American inflation remained in the shadow of high-profile European events. This release is important in itself in the context of the upcoming Fed meeting (which will take place next Wednesday), the published figures are viewed through the prism of monetary policy prospects.

However, judging by the reaction of the dollar index, traders are quite pessimistic about the possible decisions of the regulator. August inflation showed a good result, but the dollar reacted with minimal growth. It completely lost its position paired with the euro even if, these were all prerequisites for large-scale growth of the American currency. Despite weak forecasts, the basic consumer price index showed significant growth. On an annualized basis, it has been consistently increasing for the third month in a row and reached 2.4%, which has been the strongest growth rate since July 2018. On a monthly basis, core inflation is steadily reaching 0.3%, although experts expected a decrease to 0.1%. The general consumer price index also showed a relatively good result, being at the forecast level.

Exchange Rates 13.09.2019 analysis

Against the background of slurred Nonpharms, many of whose components did not reach forecast values. Inflation indicators look good. By the way, according to data published last week, the level of average hourly wages also increased (both on a monthly and an annualized basis(), while experts expected a decline in this indicator. This indicates an increase in price pressure in the country. In fact, this should support the US currency theoretically speaking.

But at the moment, the dollar is under pressure from other factors that do not allow it to "spread its wings". First, Donald Trump again called on members of the US regulator to begin "decisive action" in anticipation of the September Fed meeting. Using his usual method of communication - via Twitter - the US president demanded that the basic interest rate be reduced to zero or even to the negative area. The motives of the American leader are obvious: this step by the Fed will reduce the yield of debt obligations and reduce the cost of servicing the public debt accordingly. An additional "bonus" is a weakening of the national currency, as well as feasible assistance to the export sector.

Trump has repeatedly put political pressure on the Federal Reserve, even comparing Jerome Powell with China. In his opinion, the head of the Fed is doing more damage to the economy than Beijing. The US Central Bank formally maintains an independent position, but nevertheless, it has been systematically softening its rhetoric since the end of last year. In July, the Federal Reserve decided to lower the rate, but Powell warned that this step is a preventive, "one-time" measure, and not the start of a cycle to mitigate monetary policy. Recently, however, members of the Federal Reserve have hinted at a further reduction in interest rates.

In particular, Jerome Powell again recalled the consequences of the trade war during his last speech. He stated that growing uncertainty puts strong pressure on business investment. According to Powell, this factor forces companies to "postpone investment decisions." As for the prospects of monetary policy, here the head of the Fed repeated the phrase that the regulator "will act adequately in the current situation using monetary policy tools to support the country's economy". This is a vague wording that can be interpreted in different ways - both in favor of a wait-and-see attitude and in favor of decisive action. But if we summarize all the voiced positions of the Fed members, we can conclude that the further steps of the regulator will depend mainly on the dynamics of the us-China trade war.

Thus, macroeconomic reports now play a secondary role. Market reaction to the release of inflation data eloquently confirms this assumption. In turn, the prospects for resolving the trade conflict are still vague. Yesterday, information appeared on the market that Washington could conclude an interim agreement with Beijing that would delay the increase in duties on certain goods. But today, an official representative of the White House has denied this information. The negotiating teams next week will begin only preliminary consultations, preparing the way for a high-level meeting to be held in early October.

In the context of the euro-dollar pair, the US currency is under additional pressure from yesterday's ECB meeting. To be more precise, the results of the meeting themselves were against the euro but the market was still expecting a more "dovish" mood. In addition, according to Bloomberg, there was a split in the regulator's camp, and the Central Bank barely had enough votes to decide on the resumption of the incentive program. According to them, representatives of Germany, France, and Austria opposed QE. Also on their side stood a member of the Board of Governors Benoit Curre. If this information is true, then it will be very difficult for Christine Lagarde to take further steps in mitigating monetary policy. This informational background supports the European currency.

Exchange Rates 13.09.2019 analysis

Thus, the dollar actually ignored data on the growth of US inflation, focusing on the expectation of the results of the September meeting of the Fed. In turn, the European currency s growing due to "hawkish" rumors around the ECB. In addition, the overestimated expectations of traders played a decisive role for the euro: the European Central Bank did not use the arsenal of available tools to the fullest, and secondly, it made it clear that it did not intend to take the interest rate further into the negative area for the foreseeable future.

Summarizing the above, we can conclude that the pair maintains its upside potential to the resistance level of 1.1150, which is the upper line of the Bollinger Bands that coincides with the lower border of the Kumo cloud on the daily chart.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Performed by Irina Manzenko,
Analytical expert
InstaForex Group © 2007-2019
Benefit from analysts’ recommendations right now
Top up trading account
Get a bonus from InstaForex

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.