THE USD KEEPS STRENGTHENING AGAINST THE COMMON CURRENCY
The euro continues to weaken thanks to comments from ECB officials regarding the negative impact of a strong currency on economic growth. At the same time, the EUR/USD is still under pressure from the stronger than expected 3% GDP growth in the US for the second quarter of this year. Investor appetite did not improve for the euro even after the release of the preliminary report on the consumer price index in the Eurozone, which saw an increase to 1.5% in August compared to 1.3% in the previous month. The unemployment rate in the euro area came in at 9.1%, its lowest level since 2009 and in line with the forecast.
US dollar bulls were cheered by data on personal spending and personal income that increased in July by 0.3% and 0.4% respectively against 0.2% and 0.0% growth in June. Investors are reluctant to build up positions ahead of the labor market report for August in America that will be published tomorrow. In case of stronger than expected data, we may see the fall accelerate for the pair that will also spike thanks to fixing of positions.
The British pound continues to lose ground on the background of Brexit negotiation concerns. Investors ignored speculations about possible monetary tightening by the Bank of England due to lower risks of turbulence. The lack of progress in negotiations on the terms of the UK leaving the European Union will restrain traders from buying the pound.
The EUR/USD price recently tested important support at 1.1825. In case of success, we may see a further price decline with potential targets at 1.1750 and 1.1620. In order to renew upward dynamics with the objectives at 1.2000 and 1.2070, the quotes need to break through the SMA100 on the 15-minute chart and the 1.1900 mark.
The GBP/USD has shown a sharp decline reaching the 1.2850 mark. If the decline continues, the immediate goal will be at 1.2775, but the quotes need to break through support at 1.2840. Currently, the price is rising after a rebound and we do not exclude that within this impulse quotes will be able to return to the 1.2900-1.2950 range.
The USD/CAD is falling sharply after the release of strong GDP data in Canada, according to which the national economy grew by 0.3% in June against the predicted increase of only 0.1%. In case of breaking through the 1.2550 mark, the next targets will be at 1.2470 and 1.2400. However, if we see profit taking after a sharp decline, the pair may return to 1.2600.