USD rises after strong housing starts data
The sterling dropped sharply as Theresa May appears set on bringing her current Brexit motion to parliament in early June. With no deal between her and the Labor party, there is little chances that the premier will get the required votes. This will come a few weeks after the European parliament elections, where the Labor party is forecasted to lose to Nigel Farage Brexit party. If she loses the EU parliament and the fourth parliamentary vote, chances are high that she will be forced to resign.
The USD strengthened after a series of positive data. In April, the housing starts rose by 0.6% to 1.296 million. This was higher than the expected gain of 0.5%. In the same month, housing starts rose to 1.25 million, which was higher than the expected 1.29 million. In the past week, the initial jobless claims eased to 212K, topping the expected 220K. The continuing jobless claims dropped to 1.66 million, lower than the expected 1.68 million. The Philadelphia Fed Manufacturing Index rose to 16.6, which was higher than the expected 10.
The euro declined against the USD and the sterling after the release of mixed economic data from the region. In the EU, the trade surplus in March increased to 22.5 billion euros, which was better than the expected 19.9 billion euros. In Italy, the headline CPI rose by 1.1%, which was lower than the expected 0.6%. In Italy, the trade balance rose to 4.62 billion euros.
The EUR/USD pair declined sharply to a low of 1.1180, which is the lowest level since yesterday. On the hourly chart, this price is along the lower line of the Bollinger Bands. The signal line of the Relative Vigor Index is close to the oversold level. The volumes have dropped. There is a likelihood that the pair will continue moving lower to test the important support level of 1.1150.
The sterling dropped against the USD as traders worried about the chances of a Brexit deal. The pair reached a low of 1.2790, which is the lowest level since February 14. On the six-hour chart below, the price is along the lower line of the Bollinger Bands while the RSI has moved to the oversold level of 19. The signal line of the MACD has declined to below the oversold level. The pair is likely to continue the downward trend.
The EUR/GBP pair declined slightly today after the EU data releases and the drama in the UK. It is now trading at 0.8746, which is the highest level since May 4. On the daily chart below, the pair is close to the 50% Fibonacci Retracement level. The price is higher than the 50-day and 25-day moving averages. In the near term, the pair could continue moving higher to the 50% Fibonacci level of 0.8780.