EURUSD: the prospect of an upward correction of the euro remains very high

In the first half of the day on Tuesday, the euro managed to hold on to its positions against the background of good fundamental statistics for the eurozone. After the release of similar reports on the American economy, the pressure on the pair resumed, which led to the update minimums.

According to the data, sales in the US primary housing market rose last December. As indicated in the report of the US Department of Commerce, sales in the primary housing market rose by 3.7% compared with the previous month, to 621,000 homes per year. Economists had expected sales of 605,000 homes per year.

Good support for the US dollar was provided by data on activity in the US service sector, which grew quite strongly against the background of the growth of new and export orders.

According to the report of the Institute for Supply Management ISM, the activity index in the service sector rose to 56 points in February of this year from 54.2 points in January. Favorable economic conditions contributed to the growth of new orders in February.

The report of the Institute for Supply Management also stated that the PMI Purchasing Managers Index for the non-manufacturing sector of the United States in February rose to 59.7 points from 56.7 points in January, while economists had expected the index to grow to 57.2 points. Let me remind you that values above 50 points indicate an increase in activity.

It also became known yesterday that the US budget deficit has increased in the first four months of the current fiscal year. This happened because of tax reform, which led to a reduction in revenues and an increase in federal government spending.

According to the US Department of the Treasury, the budget deficit in the period from October 2018 to January 2019 was $ 310 billion compared to $ 176 billion in the same period last year. The increase was 77%.

Yesterday, a number of speeches by representatives of the Federal Reserve System also took place.

Boston Fed President Eric Rosengren said yesterday that right now the pause in the Fed's rate hike cycle is justified and it may take several meetings of the Open Market Committee before the picture becomes clear. He also believes that it is not yet clear whether the weakness passed from the end of 2018 to 2019, but the risks of overheating of the economy have decreased and the Fed has the opportunity to be patient with monetary policy. The representative of the Fed expects fairly healthy growth in GDP this year, at 2%.

The president of the Federal Reserve Bank of Dallas, Robert Kaplan, in his interview said that it was necessary to carefully monitor corporate bonds for difficulties since problems in the area of corporate borrowing can cause problems in the economy as a whole.

In general, with regard to the technical picture of the EURUSD pair, despite yesterday's wave of decline, the prospect of upward correction maturing remains very high. To do this, buyers of risky assets need to return to the resistance level of 1.1310, which will be the first signal to open long positions based on further growth to the highs of 1.1340 and 1.1370. In case of further decline, support will be provided by area 1.1255 and 1.1230.

The material has been provided by InstaForex Company - www.instaforex.com