Dollar is no longer spoiled child of fortune and gets heavy blows day by day. Yesterday ADP report was considerably worse than predicted. Although there is no direct correlation with the official report on labor, still, it makes dollar bulls feel nervous and close long positions on it. Besides, euro escaped negative surprises – PMI of the Eurozone in service sphere was revised upward and fall of retail sales was expected.
This trade day has started with publication of data on unemployment in Australia. The data are weak, but reaction of Australian dollar to them was limited. Apparently, the reason is general weakness of American dollar at this moment. Speaking of the rest of today’s events, we’d like to speak briefly. Euro is still looking upward. There is no significant negative yet. Economic statistics are moderately positive. Greek topic is in the background now. Today German production orders and French industrial production will be published. Forecasts are moderately positive, their realization will allow common currency to renew last maximums. Pound is in uncertainty. Today there is the Bank of England session on monetary policy, it isn’t expected to bring surprises. Accordingly, its influence on pound’s dynamics is minimal. The main uncertainty is today’s parliamentary elections. If none of parties receives qualified majority, then the U.K. will enter the phase of political instability. Parties will have to form coalitions, what will make implementing of any economic policy more difficult, as they will have to compromise. For pound this factor is negative. Dollar is under pressure. Hopes for speed-up of economic growth in the 2nd quarter aren’t met yet. Economic data don’t meet forecasts. No one believes in monetary policy tightening this summer, besides, belief in increase of rates by the Fed this autumn is fading too. Speaking of today’s statistics, there are only weekly applications for unemployment benefits. Forecasts aren’t positive for dollar. Thus, it seems that main events will develop tomorrow.
EURUSD pair has approached expected aims 1.1400 – 1.1500. In this range we’re going to look for point of closure of our long position to exit the market. It makes sense to move stop from the entry point slightly higher, at 1.1170. Our technical indicators on middle-term charts have entered overbought areas, what indicates that reversal of the pair is close. Now we aren’t ready to give recommendations about opening of short positions, but further holding of euro’s purchases is becoming more risky.
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