Home Stock EUR/USD: Progress of the American financial system is stronger than the expansion of the European one – Analytics & Forecasts – 7 August 2023

EUR/USD: Progress of the American financial system is stronger than the expansion of the European one – Analytics & Forecasts – 7 August 2023

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EUR/USD: Progress of the American financial system is stronger than the expansion of the European one – Analytics & Forecasts – 7 August 2023

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Inflation within the US is declining. It’s a truth. Nevertheless it nonetheless stays above the Fed’s 2% goal. If at a gathering in July the Fed leaders, even within the face of declining inflation and approaching its goal stage, however raised the rate of interest and expressed their readiness to proceed the cycle of tightening financial coverage, then the renewed acceleration of inflation will power the Fed to no less than hold the rate of interest at excessive ranges, and as a most – proceed to extend it. That is positively a bullish elementary issue for the greenback.

And vice versa, if the info from the US anticipated this week verify additional slowdown in inflation, then we should always count on the weakening of the greenback.

The euro is declining right this moment each in main cross-pairs and towards the greenback.

Thus, on the time of publication of this text, the EUR/USD pair was buying and selling close to the 1.0966 mark, testing an vital assist stage 1.0970 for a breakdown.

In the intervening time, EUR/USD is within the zone of the medium-term bull market, above the important thing assist ranges 1.0840, 1.0795, whereas remaining within the zone of the long-term bear market, under the important thing resistance stage 1.1070. On this state of affairs, a breakdown of the assist stage 1.0970 or resistance at 1.1000 could decide the route of the pair’s motion within the medium time period in a single route or one other (for extra particulars, see EUR/USD: dynamics eventualities for 08/07/2023).

Right here it’s value noting that macro statistics from the Eurozone printed final week and earlier didn’t present tangible assist for the only forex.

Thus, in response to preliminary information, the GDP of the Eurozone within the 2nd quarter grew by +0.6% (towards the forecast of +0.5%) and by +0.3% yr on yr (towards the forecast of +0.2%). Let’s examine the dynamics of US GDP: in response to preliminary estimates, it grew by +2.4% within the 2nd quarter (towards the forecast of development by +1.8% after development by +2.0% within the 1st quarter). Constructive information on GDP confirmed the lowered dangers of the US financial system going into recession, and GDP development could give the Fed extra time to maintain rates of interest at excessive ranges.

Weak macro statistics from the Eurozone, which pointed to a rise within the dangers of a deepening financial downturn within the area, could assist hold the ECB rate of interest on the present stage.

Help ranges: 1.0970, 1.0915, 1.0900, 1.0840, 1.0800, 1.0795, 1.0700, 1.0650, 1.0530

Resistance ranges: 1.1000, 1.1070, 1.1090, 1.1126, 1.1200, 1.1275, 1.1300, 1.1400, 1.1500, 1.1600, 1.1700

*) see additionally

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