American currency is still traded in the sideward trend, but taking into account the great importance of today’s data as well as strong state of consolidation, we can expect sharp change in prices towards both a decline in the dollar and its growth.
The signals to decline in USD are strengthening pair of EUR | USD to the absolute maximums as well as updating maximums of oil futures, which are now traded in the region of $ 113 per barrel.
The signal to the strengthening dollar is the fact that the pair has not been able to form the triangle at H4 yet.
As most of analysts expect, the dollar is likely to continue decline. In this case, the most prospective pair for buying will be EUR | USD, which is expected to grow to 1.62 marks as well as a pair of GBP | USD which is suitable to the level of strong support 1.9575.
Today the attention should be paid to CPI ex food & energy as well as Consumer Price Index.
If inflationary pressures show growth, the monetary authorities of the United States will be significantly limited in further reducing of interest rates that in the medium term should support the American currency.
The inflation data apart, we should pay attention to Housing Starts and Building Permits.
These indicators show how construction sector copes with the crisis mortgage, which has been suffered from the mortgage crisis. If the construction shows growth for a few months, then it will be a good signal for the coming completion of the crisis. Market could not apprehend single growth of indicators because of their strong decline.
Over the last trading day USD fell to one more level. The cause was a general uncertainty of investors in the American economy.
Yesterday’s statistics were not very optimistic. The Consumer Price Index showed an increase by 0.3% and CPI ex food & energy increased by 0.2% during the month. Housing Starts declined once again, reaching all 947 thousand and Building Permits fell to 927 thousand.
The data show that the construction sector continues to slow down, while inflationary pressures are still remaining within acceptable ranges and can lower interest rate once again, but as most analysts expects we will see a surge of inflation soon.
Today in the USA block of statistics will be issued, but it will not have great significance. Some fluctuation in the currency market could be caused by Jobless Claims and Leading Indicator, but, as it is expected, the market will move under the effect of technical factors.
EUR
Yesterday EUR | USD broke 1.5850 resistance level, but strong resumption of growth has not happened yet, as the market has still uncertainty about the future direction of motion. On the one hand, the continuation of decline in the American economy increasingly convinces to lower the dollar. On the other hand, the statement about concern of G7 heads about relatively low dollar can cause a strong downward pressure at any time.
Nevertheless, the price has been able to be above the level of 1.5850, which now is a strong level of support, and from which it is recommended to open positions to buy the pair if correction continues.
