STRONG NUMBERS FROM DURABLE GOODS ORDERS STRENGTHEN THE GREENBACK
The EUR/USD is falling on the background of profit taking after the recent price rally of the pair. Yesterday the FOMC published its monetary policy statement in the US and kept interest rates unchanged. The take-away for traders was that inflation slowdown in the US was not due to only temporary factors, and that chances of another rate hike by the Fed for this year are slimmer.
Positive news for the euro today came from Spain where the unemployment rate in the first quarter declined to 17.2%, which is 0.6% better than expected and 1.6% less than in the previous period. Strong support for the greenback came from the unexpectedly high pace of growth in durable goods orders for June of 6.5% versus the predicted increase of 3.5%. Investors are waiting for tomorrow’s report on GDP growth in the US for the second quarter, and in case of more optimistic data, we may see a sharp appreciation of the US dollar.
Investors in Japan are waiting for the release of reports on household spending, unemployment rate, retail sales and inflation at 23:30 GMT. The demand for safe haven assets like the yen and gold remains high due to political tensions in the US.
The pace of upward dynamics in the price of crude oil has slowed despite the fall in crude oil inventories in the US by 7.2 million barrels, according to the EIA report.
The euro has fallen against the US dollar and was able to break through the important line at 1.1700. This is the basis for a continued decline with the closest possible target near 1.1620. In order to change the trend to negative, the price has to overcome support at 1.1620. In this case, quotes may continue to decline to 1.1500 and 1.1450. Growth is likely to be limited by resistance at 1.1800.
The USD/JPY tested the support at 110.75 but could not break through it and as a result, we have seen an upward rebound. The next objectives within the current upward impulse will be at 111.70 and 112.00. Overcoming 112.00 may become a confirmation for the buy signal with targets at 114.00 and 114.70. The negative dynamics will be restrained by support at 110.75.
Gold quotes are still moving along the upper limit of the rising channel. Interest in defensive assets stimulates the bulls to push the price higher, but the strengthening of the US dollar may lead to a descending correction with the potential of reaching 1252 and 1240. On the other side, the closest goals in case of growth continuation are at 1270 and 1280.
The light sweet crude oil benchmark WTI demonstrates consolidation in the range 48.35-49.00. The next goals within the bullish trend will be at 50.00 and 52.00. In case of breaking through the support at 48.35, we may see the price drop within the correction to the support lines at 46.75 and 46.00. Volatility is likely to increase after the end of the current consolidation.