Forex Blog

Today EUR/USD renewed its historical maximum value on Forex. It touched 1.5275 shortly after the news releases from U.S. concerning the construction spendings and ISM index for manufacturing business came out. The currency pair dropped down significantly after hitting this new maximum and is now trading near 1.5210.

Construction spending in January fell compared to December by 1.7%. That’s worse than the last month’s 1.1% drop and much worse than the forecasted 0.8% drop.

ISM index for manufacturing business in February was at 48.3% — a little better than 48.0% expected by the market analysts, but still worse than 50.7% in January.

With an impressively high ISM Services index today’s macroeconomic data from United States was a very optimistic news for USD bulls. June ISM non-manufacturing index came out at 60.7% - 1% higher than May number, and a lot better than expected, since the negative change in ISM index was expected. Crude oil inventories for the previous week came out at a very good level too. They rose 3.1 million barrels - which will probably mean that there will be no problems for the U.S. holidays period. Initial jobless claims were a bit worse than expected (318,000 against 315,000) - but it’s not a big deal really, especially if overall unemployment data which will come tomorrow will be OK.
As for the Eurozone - European Central Bank decided to leave the interest rates at 4% - no surprise here. But they also didn’t mention any dangers of inflation, like they did before, so it might be a first sign for the end of ECB rate hike.
Bank of England increased the interest rates to 5.75% as expected. The main concern for them is still an inflationary pressure, but the biggest locomotive of the consumer prices in United Kingdom - real estate market is showing a slowdown.

Today Forex was a very unlucky place for U.S. dollar as the EUR/USD rallied to its two months high at 1.3630. Even good ISM index data (56% - a 1% rise - against 55% expected) couldn’t help U.S. currency after last week losses. It is almost certain now that EUR/USD has broken the down-trend and is now heading north. Probable point of strong resistance can be seen at 1.3650 level, which if broken can mean a rally to 1.3800. While, stopping at 1.3650 will probably for a double-peak pattern with a new correction wave.

Forex market today brought another surprise to the traders as the USD unexpectedly fell to 3 weeks low on mixed data from Eurozone. While some major macroeconomic indicators failed to show any good data for the Eurozone, EUR/USD reached 1.3553. Although it’s rolled back pretty fast, EUR/USD is still traded above 1.3500 (which was a strong resistance level and now is a support level). ISM Services index from U.S. came a lot better than expected - 59.7% against 55.5% expected - this factor might play its role in returning USD to bullish trend, but that would be difficult task to accomplish.

EUR/USD broke through 1.3400 today on Forex market - showing a new 7-week low. Good macroeconomic data from U.S. was the reason for this break-through. Nonfarm payrolls - a major employment indicator of the U.S. economy - increased by 157,000 in May (22 thousands more than expected), while ISM Index - reported an increase by 0.3% up to 55.0% (against 54.0% expected). ISM Index means a lot in the U.S. economy because it describes its most powerful industries, and greatly influences FOMC rate decisions. Now it is quite possible to see an increase in U.S. interest rates by 0.25% this Fall, in my opinion.