DECREASE IN CONSUMER INFLATION HAS WEAKENED THE GREENBACK

Traders started to sell the dollar after the release of unexpectedly weak data on the consumer price index in the US. In May consumer inflation declined to -0.1% against forecasted growth by 0.2%. The main factor that negatively affected inflation was the fall of gasoline prices, which reduced by 5.4% in April. Compared to the figures of the previous year, consumer inflation has grown by 1.9%. Considering that the influence of oil prices is temporary, the members of Federal Open Market Committee are still likely to raise interest rates by 0.25% to 1.00-1.25% later today and that is likely to strengthen the dollar. More volatility growth is possible during the press-conference of the Fed’s chairwoman Janet Yellen at 18:30 GMT, where traders will be trying to find hints about future plans on monetary policy normalization. Another disappointing factor for USD bulls was the data on retail sales in America that reduced in May by 0.3%, compared to predicted growth by 0.1%.

Quotes of the AUD/USD and NZD/USD today were supported by the positive news on industrial production growth in China by 6.5% for April, which is 0.1% better than the average forecast. The influence of the state of Chinese economy on the currencies of Australia and New Zealand is due to a large amount of exports from those countries to China.

Demand for precious metals like gold and silver has strengthened amid the dollar’s depreciation and volatility is likely to remain high during today’s trading session. In the case of more hawkish rhetoric by the Fed’s chairwoman, we may see the resumption of negative dynamics.

EUR/USD

The EUR/USD demonstrated a sharp increase after weaker than expected inflation data came in for the US. As a result, the possibility of more hawkish rhetoric by Fed officials has declined and that is proving positive for the pair. Quotes are trying to overcome the strong resistance at 1.1280 and in the case of success, the next targets may become 1.1400, 1.1450 and 1.1500. The RSI on the 15-minute chart is far in the overbought zone, pointing to a possible roll back with the first target at 1.1230. Volatility is expected to remain high today due to important events in the evening.

AUD/USD

The AUD/USD today was among the growth leaders thanks to both the positive influence of strong data from China and depreciation of USD. At first, quotes were able to break through the strong resistance at 0.7565 and after some consolidation resumed the growth that may continue in the nearest future up to 0.7650 and the upper boundary of the rising channel. RSI is already in the overbought zone on the 15-minute chart and that points to an increased probability of exhaustion of the current impulse. Should the mood become more bearish, the immediate goals will be 0.7600 and 0.7565.

NZD/USD

The NZD/USD price accelerated growth after it gained a foothold above the strong resistance line at 0.7225. Now the kiwi is trying to fix beyond the limits of the upward channel and the important mark - 0.7300. The closest range for reaching, within the current rising movement, will be 0.7375-0.7400. After a strong growth, we do not exclude that the price will retreat down due to profit taking ahead of the Fed’s statement on monetary policy or after its publication. In this case, the first objective is going to be 0.7250.

Gold

The gold price rebounded from the support line after previously leaving the local descending channel. As a result, the bullion changed the trend to positive and approached the resistance line of 1280. In the case of dovish rhetoric in the Fed’s statement, the rise of gold price is likely to continue to the closest targets at 1287 and 1295. Increased level of volatility is likely to remain during the rest of the day. The first goal in case of the resumption of the fall will be 1270 and after breaking through this the price may test support levels at 1265 and 1260.

WTI

Statistics on oil inventories in the US were able to offset the positive effect from the dollar’s depreciation on the American benchmark – WTI. The reserves of crude oil in the country have fallen by 1.7 million barrels against the forecasted reduction of 2.3 million barrels. The growth of oil production in the US is partially compensating production cuts in OPEC and some other oil-producing countries. As a result, WTI renewed the recent minimum near 45.20 that opened the way for the future decline to 44.25 and 43.00. The price increase will most likely be limited by the resistance at 46.00.