US dollar strong after data and monetary policy shift

The US dollar has been strong across all major pairs after key data - much better-than-expected October employment growth and, critically, very big upward revisions in weak job creation this summer.

The US dollar has been strong across all major pairs after key data - much better-than-expected October employment growth and, critically, very big upward revisions in weak job creation this summer. The numbers support the greenback and underpin the Federal Reserve’s decision Wednesday to put dovish monetary stance on hold.

EUR/USD fell every day last week with the euro ultimately giving up about 150 pips against the US dollar by late afternoon New York trading on Friday. While technical analysts point to a EUR/USD bearish double top recently formed in the daily chart, it is interesting to note that EUR/USD dollar is still trading within the band of roughly $1.12 to $1.10, closing Friday around $1.1020, that has characterized the market since early October.

Key euro $1.10 support holding

That the greenback did not blast through $1.10 EUR/USD level – considered critical by Elliott Wave analysts – is instructive. The greenback failed to do this despite the sea change in attitudes about the US economy that occurred last week – consensus is now no recession vs consensus recession quite possible. And forecasts that the Federal Reserve will continue easing have been quashed.

Such a quick and decisive change in views on the US economy and monetary policy are rare and should perhaps have led to more EUR/USD volatility last week, with possibly a much stronger greenback move. Instead trading was orderly with a steady and measured US dollar move higher.

As has been the case, EUR/USD at $1.10 is the key level. If the euro can hold there it’s a much better case for EUR/USD to move higher despite the strong positive carry bias for the greenback. If the US dollar can breach $1.10 decisively it will be very difficult for the euro bulls to recover and the greenback will likely continue its push toward the four-year high of $1.05 that began nearly two years ago.


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.