GREENBACK’S DECLINE LEADS TO GROWTH FOR OTHER CURRENCIES
The EUR/USD price broke the local descending trend line and is growing thanks to improving forecasts from the European Commission. Economic growth in the Eurozone will accelerate to 2.2% in 2017 which is 0.5% better than compared to the previous figure. At the same time, the European Commission noted the risks that can hurt economic growth in the region including Brexit, protectionism and geopolitical tensions. The bulls were encouraged by an increase in the German trade surplus to 21.8 billion euro in September against the 21.0 billion forecasted.
The main driver on the market today has been the weakening of the US dollar due to a lack of confidence in tax reforms being passed in. Proposed tax reform was one of the main stimulants for the greenback since the election of President Trump. Additional pressure on the USD came today from the initial jobless claims growing to 239,000 against the expected 232,000.
Uncertainty on the stock and forex markets resulted in an increased interest in safe haven assets like the Japanese yen. Tomorrow’s release of the tertiary industry activity index in Japan may influence traders’ mood, but the main focus will be on the discussions concerning tax reforms in the US.
British investors are waiting for the release of statistics on industrial production and goods trade balance tomorrow. The possible upside is likely to be limited by uncertainty about the outcome of Brexit talks.
The EUR/USD has left the limits of the local descending channel and is trying to fix above 1.1620. In case of success, the next targets will be at 1.1730 and 1.1825. The RSI on the 15-minute chart is close to the overbought zone and that may be a signal for a price rollback soon. In case of growth resuming, the closest targets will be 1.1550 and 1.1500.
The GBP/USD keeps moving within the 1.3050-1.3050 range. Gaining a foothold above 1.3150 may become the basis for further price increases with the closest targets at 1.3250 and 1.3400. On the other hand, in order to continue the bearish trend, quotations need to break through the support at 1.3050. Volatility is likely to remain elevated tomorrow due to a publication of important macro data.
The USD/JPY keeps moving along the inclined descending line. The closest target is located at 113.00 and breaking through it is likely to lead to 111.00 and 110.30. For the local descending trend to change to positive, the price will need to fix above 114.00. After the sharp decline, we may see the price rebound in the background of profit taking.