THE GREENBACK RESTORES PREVIOUSLY LOST POSITIONS
Today’s trading session was full of important events. First up, the head of the Reserve Bank of New Zealand, Governor Wheeler, stated that the weakening of the New Zealand dollar is needed to balance economic growth in the country. This statement together with the US dollar strengthening has led to a confident price decline of the NZD/USD. International rating agency, Moody’s, released positive news for China’s GDP growth forecast with an increase to 6.8% from the previously forecasted 6.6%. As a key trading partner for New Zealand, the good news out of China was still unable to change price dynamics for the kiwi dollar.
Moody’s also improved the forecast on economic expansion in the Eurozone for 2017 and 2018 to 2.1% and 1.9% respectively. Despite this fact, the EUR/USD was under pressure from the strong GDP report out of the US, according to which the American economy increased by 3.0% in the second quarter - 0.3% better than the expected figure. Traders are still waiting for the labor market report in the US, which will be released on Friday. Additional pressure on the pair’s quotes may come from profit taking after a prolonged rally and short position accumulation by the bears on the background of fears that the euro is overbought at the moment.
The USD/CAD is growing on the background of strong macro data from the US and increased demand for the USD. The current account balance deficit in Canada has grown to 16.3 billion in the second quarter against 12.9 billion in the previous period and that, together with the fall of oil quotes, is negative for the Canadian dollar.
On the EUR/USD price chart we saw the formation of the “head and shoulders” figure that is considered to be a reversal pattern. As a result, quotes tested the support at 1.1900 and its breaking may become the trigger for continued declines to 1.1825 and 1.1700. The upward correction is limited by the local resistance at 1.1950 and its overcoming may lead to further growth up to 1.2000 and 1.2060.
The NZD/USD fell sharply today and the closet objective within the current impulse is located at 0.7200. Fixing below this line may become the signal to accumulate short positions with the fall potential to 0.7150, 0.7050 and 0.7000. The RSI on the 15-minute chart is in the oversold zone which points to a potential upward correction soon. In this case the price may return to the 0.7260-0.7300 range.
The USD/CAD price has broken through the local high at 1.2550 and the upper limit of the descending channel. This fact may become a trigger for the trend change to positive with immediate goals at 1.2665 and 1.2800. After the sharp increase, we do not exclude a price correction with the first objective at 1.2550.