USD LOOKING TO RESTORE PREVIOUSLY LOST POSITIONS
The EUR/USD price is consolidating after strong growth triggered by the FOMC statement on monetary policy settings in the US. Yesterday the interest rate in the US was increased by 0.25% to 1.25-1.50% and currently, the regulator is forecasting three rounds of monetary tightening in 2018. Some experts predict more than three rate increases during the next year. At the same time, possible tax reform is likely to stimulate economic expansion in the US and that, in turn, will allow the central bank to act in a more hawkish manner than is currently forecasted.
The positive impulse of the common currency has been supported by the increase of the flash manufacturing PMI in the Eurozone to 60.6 against the 59.8 expected and by the increase of the flash services PMI to 56.5 which is 0.5 more than forecasted. However, euro bulls were restrained by news of the retail sales increase in the US that grew by 0.8% in November against the 0.3% anticipated.
The British pound shows signs of slowing growth and is currently consolidating in anticipation of new drivers. The Bank of England has left the interest rates unchanged at the 0.5% level as was expected. Previously the bullish sentiment on the market has been connected with US dollar weakness and the positive macro data on retail sales in the UK that increased by 1.1% versus the 0.4% expected.
Traders are waiting for the release of the Tankan manufacturing index at 23:50 GMT, that may influence the USD/JPY quotes. The greenback may regain some of the previously lost positions before the week ends.
The EUR/USD is trying to gain a foothold above the important level 1.1825. In case of success the nearest targets will be 1.1925 and 1.2000. The RSI on the 15-minute chart is close to the overbought zone which may indicate a possible downward correction soon. In case of the price crossing the SMA100 and local low near 1.1800, quotes may return to 1.1730.
The GBP/USD continues its positive movement after it was able to overcome the 1.3400 resistance. Fixing above this may become the basis for continued price increases up to the 1.3550-1.3600 range. After confident growth, we do not exclude the price correction to the inclined support line and 1.3300 mark.
The USD/JPY has broken through the inclined support line and is currently consolidating in anticipation of new signals. If growth resumes, the price may return to 113.00 and then rise to 114.00. On the other hand, fixing under the trend line will enable the bears to pull the quotes further down to 111.70.