EUR/USD KEEPS CONSOLIDATING WITHIN THE TRIANGLE
The euro today was under pressure due to a slight decline in the Flash Services PMI in the euro area that decreased by 0.2 to 54.7 in August. At the same time retail sales in July reduced by 0.3% against the forecasted fall of 0.2% and following June’s increase of 0.6%. The amplitude of price fluctuations is falling and after the end of consolidation we may see a sharp spike in volatility. Investor activity is still restrained in anticipation of the ECB’s decision on monetary policy. On one hand, we have the central bank officials’ fears over the negative impact of an appreciating euro on economic expansion in the monetary union. And on the other hand, some experts are predicting cuts to the asset purchasing program in the Eurozone from the current 60 billion a month to 40 billion. If the cuts do come through it will give additional stimulus to the bulls to push the common currency upwards. European Central Bank President Mario Draghi is due to speak on Thursday.
The USD/CHF was under pressure from the slower than expected GDP growth in Switzerland that was only 0.3% in the second quarter against an anticipated expansion of 0.5%. The demand for the Swiss franc remains strong due to geopolitical tensions caused by the crisis on the Korean peninsula.
The Australian dollar demonstrated confident growth on the background of strong statistics from China where the Caixin Service PMI grew to 52.7 in August versus the 51.8 forecasted. The Reserve Bank of Australia gave a boost to the aussie dollar with positive assessments for both Gross Domestic Product growth and for labour market conditions in Australia.
The single currency keeps consolidating within the limits of the triangle and after the price fixing beyond its limits we are likely to see a strong movement. In order to continue rising to reach the immediate goals at 1.2000 and 1.2070, the quotes need to overcome 1.1925. Breaking through the local low at 1.1850, on the other hand, may become a trigger for continued declines to 1.1750 and 1.1620.
The USD/CHF rebounded from strong support at 0.9540 and in case of further growth, the next target will be near the inclined resistance and at the 0.9700 mark. Overcoming the closest support at 0.9540 may force the bears to pull the quotes down to 0.9430.
The AUD/USD after a confident rising impulse may show a downward correction. One of the factors pointing to this probability is the RSI on the 15-minute chart being in the overbought zone. The potential correction may be limited by the angled support. For the local trend to change to negative, the quotes need to break through the 0.7940 level that coincides with the closest low.