THE WEAK DOLLAR SUPPORTS THE EUR/USD
The EUR/USD is consolidating after strong growth and currently the quotes are above the important level of 1.1800. Some pressure on the common currency came from the release of the flash manufacturing PMI for the Eurozone that declined by 0.2 to 56.6 in July against the expected 56.8. Traders took the report on GDP in stride as it showed growth by 0.6% which met forecasts. The US dollar is still under pressure thanks to political tensions and growing disappointment in the Trump administrations ability to implement stimulus measures in the US. Further pressure for the USD came from today’s report on personal incomes in the US which showed zero growth against a forecasted increase of 0.4%.
The pound received support from news on the better than expected manufacturing PMI which came in at 55.1 for July against the 54.4 predicted. The weakness of the greenback is the major factor for the growth of the sterling but investors still fear the outcome of negotiations on the terms of Brexit.
The Australian dollar fell today after the Reserve Bank of Australia commented on worsening trading conditions and the negative impact of a stronger national currency on the pace of economic expansion in the country. On the other hand, commodity markets showed price increases for oil, iron ore, copper, gold etc. which will cheer the bulls to push the price of the aussie higher. Among the medium term risks noted by the RBA includes the high debt level in China who is a major buyer of Australian export goods.
The single currency has shown consolidation within the rising trend and after its end we may see growth resume with potential target at 1.2000. Stimulus for such a move may come from the news of the fall in construction spending in the US by 1.3% in June. The closest support in case of a descending correction will be at 1.1700 and its breaking may become a signal for the trend reversal.
The British pound is moving along the inclined resistance line and the closest objective is located at 1.3250. The signal for the bears to pull the quotes down will be breaking through the local support at 1.3200. In this case, the immediate goals will be at 1.3125 and 1.3050. Volatility is likely to increase after the recent decline in the amplitude of price fluctuations.
The aussie price declined today, but was unable to break the lower limit of the rising channel. After the RSI on the 15-minute chart touches the oversold zone, we may see the price rebound with potential of growth up to 0.8000-0.8050 range. Switching the trend to negative will be possible after the breaking of support at 0.7890. And the target levels within the drop may be at 0.7800 and 0.7740.
The price of the light sweet crude oil benchmark demonstrated a confident decline after OPEC published a report according to which the production levels in the cartel increased to 33 million barrels per day. We should note that the statement about export cuts in Saudi Arabia in August and weaker drilling activity in the US has led to a strong rally during recent weeks. In case of breaking the support at 49.00, we may see the price continue to fall to 47.75 and 46.00.