EURUSD: range trading might continue
The US inflation is evidently slowing down, but some other issues are coming to surface. Namely, two weeks ago Fitch downgraded the US Government long term debt to AA+, while during the previous week another credit rating agency, Moody`s, downgraded ten US banks, with more well known names placed on the watch for downgrade in the coming period. The rationale for such a move is increasing interest rate risk in the banking books of these banks, coming from exposures to US Treasuries which could hurt bank's earnings potential and decrease the value of their capital due to increase in interest rates. As per officially released data, the inflation rate in the US was 3.2% y/y in July, slightly better from market estimate of 3.3%. At the same time, core inflation remained elevated at a level of 4.7% y/y, but still lower from 4.8% that the market was expecting. At the same time, the released Producer Price Index shows modest increase in July of 0.3%, higher from 0.2% market estimate. This might be an indication that modest inflation might continue to be persistent in the coming period. Still, posted Michigan Consumer Sentiment for August at 71.2 shows better than estimated results.
Inflation in Germany, the largest EU economy is slowing down, ending July at level of 6.4%, in line with market expectations. There has not been other important data posted for the Euro Area during the previous week.
Eurusd was traded in a bit calmer manner. Posted macro results were in line with market expectations, which hold the price of the pair relatively steady. Highest-lowest weekly levels were in a relatively short range, between levels of 1,106 down to 1,091. RSI continues to be more oriented toward the oversold side of the market, moving around level of 45 during the week. Moving averages of 50 and 200 days continue to move as two parallel lines with the uptrend, without an indication that potential cross might occur anytime soon.
The US macro results were in line with market estimate, and without any significant data for the Euro Area, the eurusd managed to hold relatively steady during the week. RSI is clearly pointing toward the potential for the move toward the oversold side of the market, which might trigger some moves toward the downside in the week ahead. In this sense, there is some probability for the currency pair to continue to test the 1,09 level, with some potential for the downside toward the 1,08 support level. On the opposite side, there is probability for a move toward the 1,10 again, with lower probability that 1,11 might be reached.
Important news to watch during the week ahead are:
Euro: ZEW Economic Sentiment Index for August for Euro Area and Germany, GDP Growth for Q2 estimate, Inflation figures for July for Euro Area
USD: Retail Sales for July, Building Permits for July, FOMC Minutes
Inflation in Germany, the largest EU economy is slowing down, ending July at level of 6.4%, in line with market expectations. There has not been other important data posted for the Euro Area during the previous week.
Eurusd was traded in a bit calmer manner. Posted macro results were in line with market expectations, which hold the price of the pair relatively steady. Highest-lowest weekly levels were in a relatively short range, between levels of 1,106 down to 1,091. RSI continues to be more oriented toward the oversold side of the market, moving around level of 45 during the week. Moving averages of 50 and 200 days continue to move as two parallel lines with the uptrend, without an indication that potential cross might occur anytime soon.
The US macro results were in line with market estimate, and without any significant data for the Euro Area, the eurusd managed to hold relatively steady during the week. RSI is clearly pointing toward the potential for the move toward the oversold side of the market, which might trigger some moves toward the downside in the week ahead. In this sense, there is some probability for the currency pair to continue to test the 1,09 level, with some potential for the downside toward the 1,08 support level. On the opposite side, there is probability for a move toward the 1,10 again, with lower probability that 1,11 might be reached.
Important news to watch during the week ahead are:
Euro: ZEW Economic Sentiment Index for August for Euro Area and Germany, GDP Growth for Q2 estimate, Inflation figures for July for Euro Area
USD: Retail Sales for July, Building Permits for July, FOMC Minutes
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