USD IS LOSING POSITIONS WITHOUT PROSPECTS OF TAX REFORM
The euro’s upward trajectory continues as the greenback falls and more positive macro data is released from the Eurozone. USD investors are frustrated by the decreasing probability of tax reforms being passed by the legislative branch in the US. Expectations of tax cuts were among the main growth drivers for the US dollar throughout this year. At the same time, the EUR/USD bulls were cheered by positive news on the trade balance surplus in the Eurozone which grew to 25.0 billion in September against the 21.2 billion expected.
Even the better than expected retail sales in the US, which came in 0.2% for October, were not able to change the mood on the market. We should note that consumer price index growth by 0.1% in October was in line with the average predictions and has not led to significant changes in the probability of the interest rate hike by the Fed in December.
The British pound has shown a slight increase in volatility following the release of labour market data, according to which the unemployment rate remained at 4.3%. The average earnings index declined by 0.1% to 2.2%, which is 0.1% better than expected.
The preliminary report on GDP in Japan revealed a slowdown in the pace of expansion to 0.3% in the third quarter of this year compared to the 0.4% forecasted. Despite the disappointing news, the USD/JPY kept falling due to investors negative sentiment of the US dollar.
Tomorrow traders will turn their focus to Australian labour market data due at 00:30 GMT and industrial production in the US at 14:15 GMT.
The EUR/USD keeps growing today and overcoming 1.1825 may become an additional stimulus for continued price increases with potential targets at 1.1925 and 1.2000. Correction is possible down to the support at 1.1730. The MACD signal line has turned around and its decline points to a possible price consolidation or decline soon.
The British pound was unable to overcome the inclined resistance line and returned to the support at 1.3150. In case of the fall continuing, within the limits of the channel, the quotes may reach 1.3050 and 1.2950. On the other hand, in order to change the trend to positive, quotes need to gain a foothold above 1.3200.
The USD/JPY price accelerated the pace of decline and touched the lower limit of the descending channel and in case of further decline within the limits of the channel, quotations may reach 111.70. We should note that RSI on the 15-minute chart came close to the oversold territory which signals a possible rebound with potential the target at 113.00.