A growth pace in the eurozone slackened to 20.5% from 39.4%, whereas economists had expected a rise of 25.1%. Although it is a significant slowdown, the figures are unbelievable.
The fact is that the low base effect is still distorting data. That is why traders should take into account a monthly report, which turned out to be rather gloomy. In a month, the eurozone declined by 1.0%, whereas analysts had foreseen an increase of 0.1%. It is a significant drop especially amid the consequences of the virus-induced crisis.
Thus, there is no wonder that the got stuck during the European session. It had no room to drop due to oversold conditions, which appeared as a result of traders’ reaction to the US jump.
Eurozone Industrial Production
A local correction started at the beginning of the US trade. It was mainly caused by a report on the US . A growth pace of the indicator advanced to 7.3% from 6.6%, exceeding the expected climb of 6.8%. It means that the country’s inflation is likely to go on rising.
Of course, the unexpected jump in the US inflation caused panic among market participants. In this case, the further growth is easily predictable. Notably, growing inflation threatens the US economic recovery. However, the lost value not only because of the report, but also amid overbought conditions.
US Producer Price Index
Today, the greenback is likely to resume climbing due to quite strong macroeconomic data. The number of may slide by 5000, whereas the number of continuing claims may drop by 39000. What is more, is expected to advance by 0.6% on a monthly basis.
Year-over-year, the may show a smaller increase of 12.2% compared to 16.3% in the previous period, reflecting the low base effect. It is better not to price in such figures. Nevertheless, the forecasts are really positive and the US dollar is likely to gain in value.
US Industrial Production
Yesterday, the euro/dollar pair once again rebounded from the support level of 1.1800 as it was on July 8.
The market dynamic is still accelerating. This is proved by the form of the candlesticks and high speculative activity.
Judging by the current price location, we can see a correctional process.
It is quite possible that buyers will meet resistance in the area between 1.1850/1.1890. This will have a negative influence on the number of long positions and may even cause a price reversal.
In terms of complex indicator analysis, we see that technical indicators on the one-minute and one-hour charts provide buy signals due to a rapid correctional movement. At the same time, on the daily chart, we see a sell signal.