OPTIMISTIC NEWS ON AMERICAN LABOR MARKET PULLS DOWN THE EUR/USD
The EUR/USD was moving within the narrow range above the important level of 1.1800 before it started to fall sharply. Investors mostly ignored the strong macro statistics from Germany, where the trade balance surplus in June was 21.2 billion against 20.8 billion euro forecasted. The German economy is the largest in the euro area and its state traditionally has a significant influence on the course of trading. Positive news from the Eurozone was partly offset by the stronger than expected NFIB small business index in the US, which increased to 105.2 in July vs predicted 103.6. The rise in volatility is explained by a surprisingly confident JOLTS job openings report according to which the indicator in June increased to 6.16 million that is much more than 5.74 million forecasted.
Traders are reluctant to open new positions ahead of the important report on consumer price index in the US that will be published on Friday. We recall that considering strong figures of the American labor market, the main attention will be turned to the news on inflation that has the major impact on the FOMC decision about the plans on monetary policy tightening. Growing inflation amid rising oil prices during the last month may lead to the dollar strengthening against other currencies.
The USD/JPY is getting some support from the stronger greenback. Previously the optimistic news for the yen have become the rising surplus of current account balance to 1.52 trillion yen in June vs 1.40 trillion yen in May. The upward impulse may continue due to fixing short positions amid positive US dollar’s dynamics.
After some consolidation above 1.1800 the EUR/USD price demonstrated the confident decline. Despite the RSI on the 15-minute chart being close to the oversold zone, we may see a continued decline to the immediate support near 1.1700. The positive trend of the previous weeks has been broken and there is a chance of a significant price correction to 1.1620 and 1.1500 the pace of which may accelerate due to fixing of long positions.
The USD/JPY quotes were not able to fix below the local support at 110.30 and are rising at the moment. Overcoming the important level of 111.00 may become a buy signal and in the case of opening long positions, the stop may be set below 110.80 and the targets will be located near 113.00 and 114.70. The closest support levels are near 110.00 and 109.60.
The aussie price is approaching the strong support level at 0.7900, which has been tested a couple of times during the last trading sessions. Its breaking point may become a trigger for the massive selloff with the potential of decline to 0.7800 and 0.7740. On the other hand, we do not exclude the growth resumption with the goal at 0.8000.