Today (16/8), EURUSD soared steeply without volatility as the perceived chances of a rise in U.S. interest rates this year took a knock from several batches of data and the dovish tone of some Federal Reserve policymakers. The currency pair is settling at $1.12970, up 1.01% compared to the opening price of $1.11800.
In a report from the ZEW Centre for Economic Research on Tuesday (16/8), German ZEW Economic Sentiment, a key indicator which should be treated as a market-mover, rose in August by 0.5 points, compared with the 3-½ year low level of minus 6.8 in July, which indicated that investors and markets had already digested the surprising Brexit vote in late June. Yet, this data missed the analysts’ estimate of 2.1 points.
Meanwhile, the index of Eurozone economic sentiment soared up to 4.6 in August, after a decrease to the negative 14.7 a month earlier. This data has beaten the consensus expectation of minus 6.3. An indicator above 0.0 indicates optimism, while a level below 0.0 implies pessimism. As a result, the euro mounted up on the back of several relatively data from the area’s economy.
Fig. Eurozone economic sentiment
Today (16/8), the greenback was knocked down broadly after a paper published by Federal Reserve Bank of San Francisco President John William indicated a possible advance to the central bank’s inflation target and Fed’s more concentration on the growth, which means the hawkish monetary policy would not be taken into action yet. The CME Group’s FedWatch tool, which gauges the market’s expectations of a change to the Fed Funds target rate, priced a 12% probability of rate increase at the Fed’s September meeting.
The dollar’s index DXY, tracking the value of the greenback against a basket of six major currencies, edged down 0.98% to 94.64.
Fig. DXY D1 Technical Chart
Today, Bureau of Labor Statistics will report the consumer price index for July, which would bolster or undermine the case for Fed to raise rates. The index is forecasted to continue June’s marginal firming. Also, the economists showed some positive outlook for core CPI with a 0.2% nudge, despite Low oil prices, a strong dollar and slow economic growth. The Fed’s industrial production report for July is anticipated to show a gain of 0.3% after a 0.6% advance in June.
Investors will remain cautious ahead of Federal Reserve’s July meeting due to publish on Wednesday (17/8) and the July policy meeting minutes from the European Central Bank, which would offer guidance on ECB thinking of the consequence from the June Brexit vote to the bloc economy.
Fig. EURUSD H4 Technical Chart
On the H4 chart, the pair is moving in a solid bullion with 3 consecutive up-move candles and currently reaching the highest level of 1.12970 since June 24th. ADX (14) is heading upwards to 36.2466, indicating that the bullish trend is taking the lead. Additionally, the moving average line continues to move below the price chart, consolidating the bull flag. The signal trend still supports a long position with the green-dot line beneath the price. The price is anticipated to consolidate the uptrend for some time.
Analyses of Group Fiinvesting
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