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Fundamental Analysis

Slower Inflation Growth in the US Results in EUR/USD Rise

Typography

The price of EUR/USD demonstrates positive dynamics after the release of important macro statistics on the consumer price index in the US, the growth of which was only 0.1% in July, doubly worse than the average forecast. Lower than expected inflation growth will restrain the FOMC from another round of rate increases until the end of the year, which in turn puts pressure on the US dollar that is also hit by political tensions within the US. The news on consumer inflation growth by 0.4% in Germany and 0.3% decline in France had little impact on the sentiment of traders.

The demand for defensive assets including the Japanese Yen, Swiss franc and gold remains high. The reason for such an interest was the Korean crisis which flared after news of potential attacks on American territory and the promise of Donald Trump to show "fire and fury" in response to the threat of nuclear attacks. Today in Japan there is a public holiday, but on Monday it will take centre stage due to the preliminary report on the GDP growth in Japan.

The oil price keeps mowing downward after a recent correction, despite the depreciation of the US dollar. Bears got some support from the recent statistics according to which the oil output within the OPEC increased in July by 173.000 barrels per day to 32.87 million barrels per day. At the same time production growth in Libya has been the fastest since the beginning of the year.

EUR/USD

The EUR/USD has shown a sharp upward movement and as a result has broken the upper limit of the descending channel and the resistance at 1.1800. This fact points to the high possibility of further growth until 1.1900 and 1.2000. In case of the fall resumption, the potential target will be at 1.1700.

USD/JPY

The USD/JPY quotes are moving along the lower limit of the descending channel. Now bears are trying to pull the price under the support at 109.00. In case of success, the immediate goals will be at 108.00 and 107.00. We do not exclude the price rebound from the lower limit of the channel with potential targets at 110.30 and 110.75. In such case the stop may be set under the 108.60.

WTI

The American oil benchmark WTI was unable to gain a foothold above the psychologically important level of 50.00 and started to correct downwards. After the strong decline, quotations may restore some positions and reach SMA100 on the 15-minute chart or even 49.00. The next targets within the saving current impulse will be at 47.75, 46.75 and 45.40.

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