Good day forex fans! Here’s a closer look on the EURUSD pair. Actually, the pair has continued to rise and has even broken the 1.3000 resistance. Back in my last post about it back in July 26 (kindly see it here), I mentioned that a break above 1.300 could propel it further north. Well, the pair has risen for awhile and even touched the 1.3100 level briefly. Though, it has retraced back around 1.3000 again. At present, the pair is just trading above the mentioned level which consequently is where the uptrend line lies. Now, it becomes more crucial since a break of the uptrend line could send it down to 1.2800 or even at 1.2700. But if the 1.3000 support and the uptrend line holds, the pair could be on north bound once again.
Earlier today, the euro has lost its appeal versus the dollar due to the unexpected decline in Germany’s retail sales (-0.9%) for the month of June after it posted a 3.0% gain in May. Moreover, news that Spain’s Aaa rating may be downgraded by at most 2 level by the international ratings agency, Moody’s also placed more selling pressure on the EUR. Remember that other countries in the euro zone like Spain, Portugal, and Italy, aside from Greece, are also suffering from fiscal difficulty. At present, the Spanish government is still trying to slash their budget deficit, which is the third largest in the euro zone. It already received credit downgrades from Standard and Poor’s and Fitch back in April and May. If Moody’s follows suit, then the confidence in the euro zone’ economy and the euro could take another blow.
But that’s for the coming week or so.
For today, the EUR could experience some volatility upon the release of the US’s second quarter GDP report. The US’s growth for the second leg of the year is seen to have slowed to 2.5% from 2.7%. Several other data indeed point to a reduction in growth or even worse. For one, durable goods orders including the core figure have unexpectedly dropped in June by 1.0% and 0.6%, respectively. New home sales likewise dipped by a hopping 30% in May. May retail sales have also dropped by about 1.0%. In case Us’s 2Q GDP comes in as projected, the EURUSD could just trade in a range bound fashion. A worse than anticipated outcome, however, could spark some risk aversion which would lead investors to back to the safety of the USD. Stay tune for the report tonight at 12:30 pm GMT!