US DOLLAR LOOKING STRONG AGAINST EURO AND BRITISH POUND
The EUR/USD price corrected upwards on the background of easing tensions connected to the political crisis in Spain which saw clashes between the supporters of Catalonian independence and police. Government statements on the desire to support negotiations on the issue eased tensions but the euro will probably remain under pressure. Some support for the common currency came from the growth of the Eurozone’s producer price index which rose by 0.3% in August which was 0.2% more than expected. Trader activity decreased today due to the banking holiday in Germany.
The US dollar is continuing to gain positions against the euro due to the rising possibility of the interest rate hike by the Fed in December and political uncertainty in the common region. The Spanish crisis and upcoming elections in Austria and Italy, which are seeing more populist anti-EU parties rise, is sending a few quivers down the line for the euro.
The British pound has been hit by the unexpectedly low construction PMI in September which was only 48.1 against the 51.1 forecast. Despite the possibility of monetary tightening by the Bank of England during the next month, the GBP/USD remains under pressure thanks to the protracted Brexit negotiations.
The Australian dollar is consolidating even with the Reserve Bank of Australia’s statement that a strong national currency may hurt economic growth in the country. This negativity was partly offset by new home sales increasing by 9.1% in August compared to the decline in July of 3.7%. The volatility of AUD/USD is likely to increase on Friday following the end of the bank holidays in China, Australia’s major trading partner.
The euro price returned to the important 1.1750 level and the upper limit of the local descending channel. Breaking this level may become a firm stimulus for future growth up to 1.1825 and 1.1925. On the other hand, there is an increased possibility of the price to fall within the limits of the channel to the closest target at 1.1620 and then to 1.1550.
The GBP/USD price slowed the pace of decline and is currently moving around the important 1.3250 level. If the bearish trend continues, the next targets will be 1.3150 and 1.3050. We do not exclude the rising price correction within the limits of the channel and the stimulus for such move may be crossing the SMA100 on the 15-minute chart.
The AUD/USD is consolidating above the 0.7800 support line and in case of the price fixing below it, we may see a massive selloff with the first goals at 0.7740 and 0.7700. In order to change the current bearish trend to bullish, quotations need to gain a foothold above the 0.7870 mark and the upper limit of the descending channel. A decline in the amplitude of price fluctuations points to the possibility of sharp moves in the near future.