EUR/USD: the pair is decreasing in view of the upcoming inflation data

Current trend

The quotes of EUR/USD are decreasing today. Euro appeared to be under pressure of negative data on the volume of industrial output in France which reduced by 1.1% in June. Moreover, the fall of the pair was facilitated by the investors’ waiting for tomorrow’s data on CPI. The indicator is expected to grow in July from 0.0% to 0.2% MoM and from 1.6% to 1.8% YoY. The correctness of this forecast is proven by the growth of average salary in the USA in July by 0.3%. On the other hand, import prices have been decreasing since January, although the outlook for July is positive as well (the indicator is expected to grow by 0.1% after 2 months of falling). Generally, the possibility of inflation growth in the USA is quite high, but it may not reach the forecast levels.

In the absence of important economic statistics today attention may be pair do the statement by the member of the Fed, head of FRB New York William Dudley in the framework of press briefing dedicated to the issues of salary payment in the region. Geopolitics may also make corrections to the movement of the pair. According to recent data, the US Department of Defense already has a plan of a preventive strike at 20 military objects of North Korea. Further aggravation of the situation between the USA and North Korea may lead to considerable market volatility and the weakening of USD.

Support and resistance

Currently the price is testing an important support level of 1.1700 (Fibo correction 23.6%, Murrey main support level [8/8], lower line of Bollinger Bands). Breaking through it may lead to further reduction to 1.1655 and 1.1590 (Fibo correction 38.2%, Murrey level [-2/8]). One may speak about growth after the consolidation of the price above the level of 1.1755 (Fibo correction 38.2% for the long-term trend, middle line of Bollinger Bands). In this case the price may grow to 2-week maximums at 1.1890.

Support levels: 1.1700, 1.1590, 1.1500.

Resistance levels: 1.1755, 1.1825, 1.1890.

Trading tips

In the current situation short positions should be opened after the price consolidates below 1.1700 with targets at 1.1655 and 1.1590. Stop-loss should be placed at 1.1740.

Long positions will become relevant after the breakout of the level of 1.1755 and the middle line of Bollinger Bands. The targets will be at 1.1825 and 1.1890. Stop-loss should be placed at 1.1710.

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