EUR/USD: the euro keeps positive momentum

EUR/USD: the euro keeps positive momentum

8 August 2017, 12:58
TifiaFX
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Despite data provided yesterday by the German Ministry of Economy, industrial production in June fell by 1.1%. This was the first reduction in production since December last year. Germany's exports in June compared with May decreased by 2.8%. The reduction of exports was noted this year for the first time: in the period from January to May, exports grew. Such data was provided today by the statistical office of Germany.

Nevertheless, Germany's foreign trade surplus rose in June (EUR 21.2 billion versus EUR 20.3 billion in May and EUR 21.0 billion forecasted). The positive balance of the current account of Germany's balance of payments in June amounted to 23.6 billion euros compared to 16 billion euros in May.

Despite the unexpected decline in industrial output in June, the German economy shows steady signs of stable recovery.

According to the forecast of the IFO Institute, in the second quarter Germany's GDP grew by 0.8% (official data will be released next week).

On September 24 parliamentary elections are planned in Germany. They will go against the backdrop of strong economic growth and low unemployment, which in turn will contribute to the victory of the center-right bloc headed by Chancellor Angela Merkel.

Stability of the domestic political situation in Germany, as well as strong growth rates of the largest economy of the Eurozone contribute to the positive dynamics of the EUR / USD pair.

Meanwhile, the dollar stabilized on Tuesday after strong growth on Friday amid glaring indicators of the US labor market. Yesterday's comments by the President of the Federal Reserve Bank of St. Louis James Bullard that the latest inflation data "cast doubt on the view that US inflation is confidently returning to the target level" contributed to a reduction in the likelihood of another increase in the interest rate in the United States. According to the CME Group, investors consider a 46% chance of raising the Fed's key interest rate this year, against 50% on Monday.

Slowing inflation may not allow the Fed to raise interest rates, and this is a strong negative factor for the dollar.

Friday (12:30 GMT) data on inflation in the US for July will be published, and if it fall below the forecast, the pressure on the dollar may recover.

Today, in the absence of important news, it is assumed that the volume of trading will be small, and the dynamics of currency pairs, including the EUR / USD pair, is weak.

*)An advanced fundamental analysis is available on the Tifia website at tifia.com/analytics

 

Support and resistance levels

Support level 1.1780 (EMA200 on 1-hour, EMA50 on 4-hour charts and Fibonacci level 38.2% of corrective growth from the lows reached in February 2015 in the last wave of global decline of the pair from 1.3900 level) did not allow the EUR / USD pair to develop a downward correction against the background of the publication on Friday of data from the American labor market.

Despite a 100-point corrective decline, the pair EUR / USD remains positive, trading in the uplink on the daily chart, above the key support level 1.1610 (EMA200 on the weekly chart). In case of resumption of growth and breakdown of the local resistance level 1.1890, the target will be the levels of 1.2050, 1.2180 (Fibonacci level of 50%).

The signal to decline will be the consolidation below the support level 1.1780. In this case, a decrease to levels 1.1610 is likely. Only in case of breakdown of the support level 1.1570 (EMA200 on the 4-hour chart) can we take the short positions on the EUR / USD pair more seriously.

Support levels: 1.1780, 1.1715, 1.1685, 1.1610, 1.1570

Resistance levels: 1.1890, 1.2050, 1.2180

 


Trading Scenarios

Sell ​​Stop 1.1765. Stop-Loss 1.1830. Take-Profit 1.1715, 1.1685, 1.1650, 1.1610, 1.1570

Buy Stop 1.1830. Stop-Loss 1.1765. Take-Profit 1.1890, 1.2000, 1.2050, 1.2100, 1.2180

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