TRADERS ARE WAITING FOR THE FED STATEMENT TOMORROW
The EUR/USD regained some lost positions during the trading session. Thus, the positivity of the bulls has assisted the report according to which the current account balance in the Eurozone has grown to 25.1 billion euro in July compared to 22.3 billion euro expected. Moreover, the German ZEW Economic sentiment index improved to 17.0 in September against predicted growth to only 12.3. We recall that the German economy is the largest on the continent. We should mention that despite parliamentary elections in Germany that will be held this Sunday, investors do not fear any surprises from it and remain calm.
American investors were cheered by the strong housing macro statistics according to which the number of building permits increased to 1.30 million in August; that is 0.08 million more than forecasted and the housing starts figure was 1.18 million in the same period which is by 0.01 million above predictions. Investors are reluctant to accumulate positions ahead of tomorrow’s release of the Fed statement on monetary policy. Markets do not expect the change in interest rates by the central bank of the US, but the rhetoric concerning the possibility of the rate hike in December way provoke the sharp price movements. Hawkish words from Janet Yellen may become a trigger for the massive sell of EUR/USD after the long rally of the pair.
Among important statistics today we should pay attention to the current account balance in New Zealand, which will be published at 22:45 GMT and the trade balance report in Japan at 23:50 GMT that may also increase the volatility level.
The EUR/USD price tested the resistance at 1.2000, but the bulls were short of strength to push the quotes above this psychologically important mark. In case of successful attempt to gain a foothold above 1.2000, we may see continued increase up to 1.2070. In case of the trend change to negative, the sell signal with the targets at 1.1825 and 1.1750 may become breaking through 1.1925 support line.
The pound is retreating after the comments of the head of the Bank of England concerning the slow pace of possible monetary tightening in the country. Within the current descending movement, the price will be able to hit the support at 1.3400 and in the instance of fixing below it, we may see a continued drop to 1.3250 and 1.3150. The growth potential is likely to be limited by the 1.3600 mark.
The New Zealand dollar demonstrates confident upward trend which may approach the closest target levels of 0.7340 and 0.7375. Yesterday investors ignored the positive news about the Westpac Consumer sentiment index to 112.4 in the third quarter vs 113.4 in the previous period. The immediate objective for the bears in case of the price pullback will be at 0.7250.