EURO HITS 2.5 YEAR HIGH
The EUR/USD has shown confident upward movement following the speeches of the central bank heads from the Fed and the ECB. Investors didn’t get any hints from the Fed’s Janet Yellen on possible cuts in the balance sheet. At the same time the head of the ECB, Mario Draghi, didn’t make mention of the possible negative consequences from euro strength on the prospects of economic growth within the monetary union. Currently, the price is consolidating and after its end, we may see continued increases on the background of political instability in the US due to a possible failure in the negotiations around the debt ceiling. At the same time, Donald Trump’s administration is still not receiving enough support to conduct promised reforms.
Investors are waiting for important statistics on Friday from the labor market in the US that may show a slowdown in the pace of new jobs generation. Today the goods trade balance report in the US showed a deficit of 65.1 billion dollars versus the 64.5 billion dollars expected but this data was largely ignored by the market.
The USD/JPY keeps consolidating despite the greenback’s weakening. The volatility may rise today on the background of household spending and unemployment reports in Japan that will be published at 23:30 GMT.
The US oil benchmark WTI is losing ground amid the shutdown of a number of refineries in the US because of Hurricane Harvey that will probably curb crude oil demand in the US. The fall potential is likely to be limited due to lower production levels in the Gulf of Mexico.
The common currency keeps consolidating against the US dollar after a confident growth during the last session of the previous week. On the 15-minute chart, we see the “flag” formation that usually points to a trend continuation. The closest target in case of growth will be 1.2000 and in case of fixing above this psychologically important level, we may see further growth up to 1.2200. We do not exclude descending correction amid profit taking with the fall potential at 1.1900.
The USD/JPY is rising after the rebound from the inclined support line. The next target in case of growth will be at 109.60. Breaking through the inclined resistance line may become the basis for continued growth up to 110.30 and 111.00. We expect a rise in volatility after the end of the current price consolidation. Decline is possible to 108.50-108.85.
The WTI crude oil price is sharply falling after it was unable to overcome resistance at 47.75. Breaking through the local support at 46.75 may open the way for continued decline to 46.00 and 45.40. The RSI on the 15-minute chart is in the oversold zone, that may become a reason for an upward correction soon to 47.00 and 47.75. The local trend remains negative.