The U.S. dollar halted to decline and advanced against key currencies on Wednesday after the release of minutes from last month’s Federal Reserve meeting, where policy makers decided to raise short-term interest rates for a third time in 2017.
The euro fell to a session low versus the dollar, erasing the gain from the previous day and closing at $1.20129. The pair drop was mainly due to the release of minutes and a robust economic outlook showed by manufacturing data in the U.S.
U.S. factory activity increased more than expected in December, boosted by a soar in new orders growth, in a further sign of strong economic momentum at the end of 2017.
Aside from data of new orders, the economy’s robust fundamentals were also underscored by other data on Wednesday showing construction spending rising to a record high in November amid broad gains in both private and public outlays.
The Institute for Supply Management (ISM) said its index of national factory activity climbed to a reading of 59.7 last month, the second-highest reading in six years, from 58.2 in November. A reading above 50 indicates growth in manufacturing, which accounts for about 12 percent of the U.S. economy. While a measure of factory employment fell 2.7 points last months it remained at lofty levels consistent with an expansion in manufacturing payrolls.
U.S. Federal Reserve policymakers showed worry over the fate of currently low inflation and saw recent tax changes as providing a boost to consumer spending, according to the minutes of the U.S. central bank’s last policy meeting on Dec. 12-13 released on Wednesday.
Technically, EUR/USD had a pullback in face of a resistance at Sept. 8’s high of 1.20912, with simultaneously facing a support level found at Nov. 27’s high if it keeps falling. The pair may struggle between this level for a while, and investors should be better to keep looking until its breakout either of the two levels.
With looking at an indicator of MACD, no sign of downside has been shown at this moment, while neither of continuous growth. Hence, investors should be more patient and keep close eyes on its moving for the near future.
Figure 1: EURUSD Daily
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