Fundamental Analysis – USD picked up on mixed data July 27, 2017

EUR/USD erased the morning gains

The greenback has managed to increase in the second part of the day and recovered a little after the massive drop. EUR/USD dropped significantly in the afternoon, even if the United States data have come in mixed, but the decrease was somehow expected because the pair was too overbought to continue the upside movement.

The currency pair climbed as much as 1.1776 today, much above the 1.1739 yesterday’s high, has rallied after the FOMC Statement, as you already know, the Federal Reserve has decided to keep the monetary policy unchanged, the Federal Funds Rate remains steady at 1.25%.

The traders were disappointed and have sent the greenback much lower versus all its rivals because there are rumors that said that we may not see another hike this year. Personally, I believe that the FED could take action again if the US data will impress from September.

USD climbed today, even if the Unemployment Claims increased unexpectedly higher in the previous week, from 234K to 244K, more versus the 240K estimate, the Core Durable Goods Orders increased only by 0.2%, less versus the 0.4% estimate and compared to 0.3% growth in the previous reporting period. The Prelim Wholesale Inventories have surged by 0.6%, more versus the 0.3% estimate, this was bad for the USD.

Personally, I believe that the USD was driven higher by the technical factors today, has received a helping hand also from the Durable Goods Orders, which increased by 6.5% in June, beating the 3.5% estimate and from the Goods Trade Balance, the indicator increased from -66.3B to -63.9B, more compared to the -65.0B estimate.

On the other hand, the Euro wasn’t impressed by the Euro-zone data, the Spanish Unemployment Rate dropped from 18.8% to 17.2% , much below the 17.8% estimate, while the Euro-zone M3 Money Supply increased by 0.5%, matching expectations. The Gfk German Consumer Climate increased from 10.6 to 10.8 points in July, beating the 10.7 estimate, unfortunately the Euro-zone Private Loans have increased only by 2.6%, less versus the 2.7% estimate.

EUR/USD dropped today, but the perspective remains bullish on the Daily chart, remains to see what will happen tomorrow because the US and the Euro-zone are to release significant numbers, so you should keep an eye on the economic calendar to see what will move the price.

By Olimpiu Tuns

Market Analyst

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