STRONG DATA ON INDUSTRIAL PRODUCTION SUPPORTED THE GBP/USD
The EUR/USD could not continue its fall due to the suggestions of increased volatility following the release of the consumer price index in the US. The average growth forecast is around 0.2% in July but considering the rebound of oil prices, we may see a faster increase in inflation. In such cases, the probability of a third rate hike by the Fed before the end of the current year may be higher. That in turn may result in a declining price for the EUR/USD. Some pressure on the greenback was provided by the weaker data on initial unemployment claims in the US which have grown to 244.000 thousand vs an anticipated 240.000. Moreover, the producer price index in America reduced by 0.1% in the prior month compared to an anticipated increase of 0.1%.
The RBNZ has published its statement on monetary policy according to which the strong national currency may hurt the pace of economic expansion in New Zealand. Inflation in the country is slowing but at the moment its central bank does not see the reasons for additional monetary easing in the country. Considering the US dollar strengthening and the weaker kiwi, we may see further declines in the nearest future.
The British pound restored some previously lost ground after the statistics on industrial production growth in the UK cheered the bulls. Thus, the indicator increased by 0.5% which is 0.4% more than expected. On the other hand, positive dynamics was restrained by disappointing news on growing trade balance deficit of 12.7 billion pounds in June vs 11.0 billion pounds predicted earlier.
The single currency price was again unable to overcome the closest support at 1.1700. Currently, the quotes approached angled resistance and in the case of its breaking through, we may see a further increase to 1.1800 and 1.1900. On the other hand, in the case of breaking through 1.1700, the fall is likely to continue to 1.1620 or even 1.1500. Volatility is likely to remain high during the rest of the week.
The kiwi is moving along the lower limit of the descending channel. Fixing below the important level of 0.7300 may become the stimulus for continued decline to 0.7200. On the opposite, in case of a price return above 0.7300, we are likely to see the rising dynamics to the potential target near the upper limit of the channel and the resistance at 0.7375. The MACD signal line sharply rising and crossing the zero mark may be an additional stimulus for the bulls.
The pound sterling keeps moving within the range of 1.2950-1.3050. Recently the quotes touched an important inclined support line and fixing below it at 1.2950 may provoke the sharp fall to 1.2880 and 1.2800. We should note the possibilities for opening long positions with potential targets at 1.3150 and 1.3250 and a short stop below 1.2950. Volatility may be high tomorrow due to the release on inflation data in the US.