EUR/USD REACHES 23-MONTH HIGH
The EUR/USD is testing important resistance at 1.1700 on the background of weaker positions of the US dollar and optimism concerning the possibility of monetary policy tightening in the EU. The Eurozone is considering reducing the asset purchasing programme in 2017, ahead of expectations. More support for euro bulls came from the German business climate index report calculated by Ifo, according to which in June the indicator grew to 116.0 against 115.2 in May. The greenback continued to feel pressure on the release of the house price index in the US that showed slowing momentum to 0.4% versus the expected 0.5%. Still, the main factor that is the focus of the market remains the political situation in the US where the chances for implementing reforms by Donald Trump’s administration are fading. This issue is likely to continue putting pressure on the USD in the near future.
The British pound also received support from the falling US dollar, but data from the CBI industrial orders expectations index showing a decrease to 10 in June against 16 in May, negatively affected the bullish sentiment. Positive dynamics for the pound continue to be restrained due to low chances for consensus in the Brexit talks with the EU.
Crude oil continued confident growth due to yesterday’s statement by a Saudi Arabia official on the intention to cut oil exports by 1 million barrels per day in August. Also, Nigeria decided not to raise its output level above 1.8 million barrels per day compared to the current figure of around 1.64 million barrels per day. This news is likely to push oil prices higher in the coming days.
The common currency is trying to overcome resistance at 1.1700, and then the next objective will be located at 1.1800. Support for the US dollar came from the consumer confidence index from the Conference Board that grew to 121.1 in June versus the 116.5 expected. In case of a rollback, quotes may reach 1.1620 and the lower limit of the channel. Traders are waiting for tomorrow’s FOMC statement on monetary policy in the US, which may lead to increased volatility.
The pound price could not leave the limits of the local rising corridor and after testing its upper boundary, retreated downwards. A further increase will most likely be limited by the horizontal resistance line near 1.3120. The RSI on the 15-minute chart points to the possibility of a further downward correction within the channel with the closest target near its lower limit.
The light sweet crude oil benchmark demonstrated confident growth which accelerated after overcoming 46.75. In order to continue the current impulse, the price needs to break through 47.75. The targets in this case will be at 48.35 and 49.00. Closest support lines remain at 46.75 and 46.00. The RSI on the 15-minute chart is in the overbought zone, pointing to the possibility of a correction soon.