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EUR/USD To Break Above 1.3850?

August 8, 2007 (Last updated on December 1, 2009) by

After the Federal Open Market Committee released its statement yesterday EUR/USD remained on its positions until today’s early European session, which brought Euro to a rally behind the crucial 1.3800 mark. Will EUR/USD stay above it? Probably. Will EUR/USD break the 1.3850 resistance barrier to soar high to 1.4000 level? Less probably. Let’s look on the fundamentals.
Yesterday a labor productivity data for the industrial sector came out lower than expected by the majority of traders — 1.8% increase, instead of 2.1%. Meanwhile, consumer credit for June this year increased by 13.2 billion dollars, while analysts were expecting 6 billion dollars increase.
FOMC released another inflation-concerned‘ statement, leaving the interest rates at 5.25% level. While the main concern for the FOMC remains the inflation, it started to get nervous because of the risks connected with the economical growth and especially housing crisis.
Today data on business wholesale inventories came out slightly better than predicted — increased by 0.5% instead of 0.4%, while the crude oil inventories again dropped down significantly — by 4.1 million barrels.
Despite of FOMC being more inflation orientated, the economical growth correction will probably make them to decrease the interest rates at least once (or at least stop increasing it even more). Currently, housing data and oil inventories (taking in mind current oil prices) don’t look very promising for the U.S.

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