European currencies have good chances for further growth
British pound continues to lead in the race against dollar. Yesterday it got new portion of positive from the data on industrial production, which were better than predicted, and it added a figure to the previous day. It retains prospects for continuation of growth if news background remains positive for it. The common currency renewed growth too. The news that Greece paid regular tranche of 750 million euro to IMF the day before became a positive for it. Dollar’s attempt to recapture the initiative last week failed.
This day is very important for European currencies. Main movement drivers are set up there. For the Eurozone it is preliminary data on GDP for the 1st quarter in most main European countries, including Germany and the Eurozone as a whole. After moods about Greece calmed down, investors get an opportunity to look more closely into economy. In recent weeks negative has apparently reduced there. Inflation has stabilized, the economy shows signs of moderate recovery. Against the background of hung up with terms of monetary policy tightening by the Fed, the pressure on euro has weakened and reasons for more substantial correction growth have appeared. If European economic statistics support European currency, then there can be talk about aims in the range 1.1700 – 1.2000. Besides, the situation develops favorably for British pound. After victory of conservatives in the elections, the irritant in the form of political instability was eliminated from the agenda. Economic statistics have also improved. Today the report on unemployment will be published, the indicator, which has constantly shown good results last months. Besides, today the Bank of England is to publish its quarter report on inflation forecasts on economic growth. Investors expect increase of forecasts, what will again allow to speculate on increase in rates by the Bank of England. In this case, pound’s growth will only speed up. Today for dollar, the data on retail sales for April can become the main support, certainly, if they do not disappoint. Still, even in case of positive, in contrast to the other news background, it can only slow down the rate of dollar’s retreat, but shouldn’t provoke radical change of moods today. At least, today.
EURUSD pair reached the first aim 1.1260. Ranges 1.1290 – 1.1300 and 1.1390 – 1.1400 can be aims of further movement. At this stage, we remain euro bulls and recommend retaining long positions. Our position from 1.1150 is still active, stop is at the entry point.
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