INFLATION IN THE EUROZONE SUPPORTS THE EURO
The market is waiting for new drivers in order to figure out directions over the next couple of weeks. The trigger for volatility growth this week may come from the FOMC statement on monetary policy in the US, which will be published on Wednesday. The change in interest rates is not expected after this meeting but investors will be closely monitoring rhetoric by Fed Chair Janet Yellen, and in case of hawkish comments, we may see a massive selling of the EUR/USD.
Inflation in the Eurozone was published today with the consumer price index in August meeting the forecasted 1.5% level. As inflation reaches the ECB’s target level of 2.0% we may see the central bank pull back on its asset purchasing program. Previously the ECB noted that they are likely to discuss the process of cutting the quantitative easing program in the euro area during the next meetings. This scenario is already being partially priced into the EUR/USD value.
The Canadian dollar is consolidating within the sideways channel after a sharp rise that was caused by the rate hike from the Bank of Canada. Today’s data release for the foreign securities purchase amount in Canada showed growth of 23.95 billion in July against the forecasted growth of only 4.46 billion. The data was mostly ignored by the markets.
Traders are waiting for the Reserve Bank of Australia’s monetary policy meeting minutes that will be published tomorrow at 01:30 GMT. This event may lead to a rise in volatility for the AUD/USD which remained around the 0.8000 level during the last trading session.
The EUR/USD quotes are moving alongside the inclined resistance line and were able to restore positions after unsuccessfully testing support at 1.1925. The closest goal within current growth is at 1.2000 and its overcoming may open the way for bulls to push the pair up to 1.2100. In case of the price fixing below the support at 1.1925, the closet goals will be at 1.1825 and 1.1725.
The USD/CAD price was not able to reach the psychologically important support level of 1.2000 and is currently consolidating within the local rising channel. The volatility level has fallen significantly and this points to the possibility of sharp price moments soon. Overcoming the local high near 1.2230 will be the stimulus for increases up to 1.2365 and 1.2470.
The AUD/USD price remains near the important 0.8000 mark. The upside is possible to 0.8125. Factors that are in favour of growth resuming are the RSI on the 15-minute chart being near the oversold zone and the MACD histogram approaching the zero point; the crossing of which will be additional stimulus for price growth.