Euro falls sharply after weak German PPI data
The price of crude oil stabilized today after Iran rejected that the US had shot down its drone at the Strait of Hormuz. The announcement was made by the Iranian deputy finance minister, Abbas Araghchi through Twitter. Yesterday, Donald Trump said that USS Boxer had shot down an Iranian drone that was flying too close to it. Last year, US defense officials started deploying a system that can detect drones, jam the signals that connects them with the remotely located pilots and cause them to crash. This week, the US continued adding more warships at the Strait of Hormuz in a show of force that is intended to reaffirm American commitment to the region.
The euro dropped sharply against major currency pairs after Germany released disappointing PPI data. In June, the country’s PPI rose by an annualized rate of 1.2%, which was slightly lower than the consensus estimates of 1.4%. In May, the PPI had risen by 1.9%. On a MoM basis, the PPI declined by -0.4%, which was worse than the expected decline of -0.1%. The PPI is an important measure of consumer inflation. Meanwhile, in the European Union, the current account rose to EUR 29.7 billion, which was better than the expected EUR 21.2 billion.
In the United States, futures moved slightly higher as investors continued to focus on corporate earnings. Blackrock was among the companies to report before the market open. The company reported earnings per share of $6.41, which was lower than the expected $6.50. The company’s earnings in the quarter were affected by lower fees. On a positive note, the company attracted inflows of more than $151 billion, boosting its assets under management to $6.8 trillion. These inflows were mostly to its passive investment business.
The EUR/USD pair declined sharply after the weak PPI data from Germany. The pair declined from a high of 1.1280 to a low of 1.1230. The Average True Range (ATR) indicator, which is an important measure of volatility declined from yesterday’s high. On the hourly chart, this price is slightly lower than the middle line of the Bollinger Bands. The RSI also declined from a high of 72 to the current 42. The pair will likely continue moving lower to 1.1220.
After rising sharply in the Asian session, the GBP/USD pair declined slightly to a low of 1.2500. On the hourly chart, the pair remains below the important resistance level of 1.2570. This price is along the middle line of the Bollinger Bands. The RSI has moved from above 70 to the current 55. It is between the 50% and the 38.2% Fibonacci Retracement levels.
The XBR/USD pair rose today after Iran announced that none of its drones were shot down. The pair is trading at 62.65, which is much higher than the intraday low of 60.97. On the hourly chart, the pair is trading at 23.6% Fibonacci Retracement level. This price is slightly above the middle line of the Bollinger Bands while the RSI has been unmoved. The pair will likely remain being volatile as geopolitical tensions rise.