Foreign exchange markets will continue to balance in the "sideways": EUR / USD and USD / CAD sales on growth
The wave of optimism that came from China turned out to be short-lived. The published strong GDP data from the labor market, as well as the values of retail sales, could only temporarily maintain positive sentiment in the markets. In our opinion, they only brought confusion and allowed speculators to use them only as a pretext for short-term transactions.
In the foreign exchange market, the US dollar was under pressure in the Asian trading session, but everything returned to normal since the beginning of trading in the States. The decline in the US stock market showed that investors continue to doubt the unclouded prospects for global growth. They are still balancing due to the uncertainty factor, which has been gnawing the markets for the fourth consecutive month. Naturally, this picture is most fully reflected in the foreign exchange market, which has always been characterized by high volatility but once again, fell significantly in recent months. This probably led to the loss of a significant number of speculative investors.
Today, the situation may somewhat liven up against the background of the publication of data on the index of business activity in the manufacturing sector of Germany and the eurozone, as well as retail sales in the United States. It can be assumed that if the index of business activity in the manufacturing sector in Germany and the eurozone shows growth as predicted. This will push the demand higher for risky assets and the single currency may receive short-term support. At the same time, the expected increase in the base index of retail sales in the United States may cool the growth of the euro against the dollar, which returns the situation to the already usual direction of lateral dynamics.
In general, we do not expect any noticeable changes in the market since there are no significant and weighty reasons for this.
Forecast of the day:
The EUR/USD pair will most likely remain in the lateral range of 1.1280-1.1325. But if the data from Germany and the Eurozone come out weaker, the pair may be under pressure after rising to 1.1325 and fall back to 1.1280. A breakthrough of this level will lead to a price reduction to 1.1250.
The USD/CAD pair will grow to 1.3390 on expected positive data on US retail sales. We consider it possible to sell it from this mark with a local target of 1.3290.
The material has been provided by InstaForex Company - www.instaforex.com