This week will be full of events which may lead to a resumption of the dollar’s decline

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<div>This week will be full of events which may lead to a resumption of the dollar's decline</div>
This week will be full of events which may lead to a resumption of the dollar’s decline

The market will definitely focus on the result of the Federal Reserve’s monetary policy meeting this week. Investors keep in mind the probability of some new statements on the monetary exchange rate in the near future, but they also admit that they will not follow it. Of course, this is an important event, but it is not the only one that will be closely monitored.

On Wednesday, extremely important values of consumer inflation in the UK, Eurozone and Canada will be released, while we have retail sales values in America. The revised values of GDP for the 2nd quarter and data on employment in New Zealand will also be presented. On the other hand, the Central Bank of Japan and the Bank of England will hold meetings on monetary policy. There will be numbers on the number of applications for unemployment benefits in the States, the number of building permits issued, and the value of the production indicator from the Federal Reserve Bank of Philadelphia.

Of course, the situation with the production of the COVID-19 vaccine should also be considered. The University of Oxford and AstraZeneca have announced the resumption of work on a vaccine, which could spark optimism in the markets.

As we can see, the week will be quite busy with events that will undoubtedly have a significant impact on the dynamics of the currency market.

What can you expect this week?

We believe that the Fed’s final decision on monetary policy will not surprise the markets, which means that its participants will continue to focus their decisions on transactions on the emerging economic statistics. In addition, the focus will definitely be on the number of applications for unemployment benefits. It is assumed that their number fell to 850,000 against 884,000 last week. If this decline is actually observed and slightly noticeable, it will be negative for the US currency exchange rate and support the overall demand for risky assets.

As for the results of the meetings of the Central Bank of Japan and the UK, it is assumed that all the parameters of monetary policy will be preserved in relation to the level of interest rates and the volume of stimulus measures.

With regard to the dynamics of the pound and the euro, we believe that the former will remain under pressure in the wake of Brexit and the continuous probability of the Central Bank expanding stimulus measures amid the weak British economy. As for the euro, it seems that it will resume its upward trend, but only if the mood on global markets changes from negative to positive. In turn, we expect a similar picture from the movement of commodity currencies.

Forecast of the day:

The EUR/USD pair is trading above the level of 1.1840, which is expected to continue to rise to the level of 1.1900.

The GBP/USD pair found support at the level of 1.2775. We believe it is possible to sell it on the rise, around the level of 1.2865 with a likely resumption of its decline to 1.2650.

<div>This week will be full of events which may lead to a resumption of the dollar's decline</div>

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

Source : https://www.mt5.com/forex_analysis/quickview/259245/