The European currency rose yesterday against the US dollar in the second half of the day after the speech of the president of the European Central Bank, but it was not possible to stay on the monthly highs for risky assets, which returned the market to the side channel again.

Mario Draghi

The speech of the head of the ECB was quite positive.

The president of the European Central Bank, Mario Draghi, said that the acceleration of wage growth, along with the achievement of targeted inflation, will gradually turn off soft monetary policy and raise interest rates.

Draghi also pointed out that the situation in the euro zone's labor market is improving, but there are signs of a shortage of labor in some countries and some sectors. The ECB forecasts that the inflation rate without consumer prices and energy will be 1.8% in 2020, and recent events only confirmed the truthfulness of the earlier ECB inflation forecast.

USA and South Korea

Monday night, it became known that the United States and South Korea signed a new trade agreement, through which American farmers will have more free access to the South Korean market.

In a statement by US President Donald Trump, it is said that the new agreement will reduce bureaucracy and contribute to the prosperity of both countries. The US President also drew attention to the fact that the trade agreement with South Korea was brewing for a long time. He also counts on the conclusion of new fair trade agreements with other countries.

As for North Korea, the White House noted significant progress in the negotiations. It is expected that Trump will discuss the situation in North Korea with the South Korean leader Moon.

Fundamental data

The fundamental data on the American economy that emerged yesterday afternoon slightly supported the US dollar.

According to the report, the index of national activity of the Fed-Chicago in August 2018 remained unchanged compared to the previous month due to the decline in the employment index. So, the index of national activity in August was 0.18 points, as in July. The average national activity index for three months increased from 0.02 in July to 0.24 in August.

Business activity in the area of responsibility of the Federal Reserve Bank of Dallas in September slowed down due to the fact that the production index showed a slower growth. According to the report presented by the Fed-Dallas, the index of business activity fell to 28.1 points, while economists expected the index to be 31.7 points. The production index in September fell to 23.3 points.

Technical picture of EUR / USD

The situation in the euro has not changed. The unsuccessful breakdown of monthly highs yesterday and the formation of a large resistance level of 1.1800 limits the upside potential. Sellers, apparently, will try not to allow a repeat test of this maximum today, and therefore short positions can be returned on growth from the resistance range of 1.1785-1.1790. The main goal will be a re-decline in the support area of 1.1730 and its breakdown, which will lead to the formation of a downward price channel and a corrective trend with the lows of 1.1685 and 1.1650.