The euro traded quite restrainedy in the morning paired with the US dollar after the release of statistics on retail sales and the producer price index. Given the lack of important fundamental news, volatility is likely to remain intraday.
According to the report of the statistics agency, retail sales in the euro area for May this year remained unchanged. This happened because the increase in energy prices had a negative impact on spending related to other goods and services. So, energy prices in June rose by just 8%. It is most likely that such a weak indicator will create additional pressure on the prospects for economic growth in the future.
As for the report on producer prices, then the European Central Bank has nothing to worry about. According to the data, the producer's selling prices in May 2018 increased by 0.8% compared with April. As for the same period in 2017, the prices increased by 3%.
As before, this increase was mainly due to the growth in tariffs of energy companies of 2.6%. Without taking into account the cost of energy carriers, producer prices increased by only 0.2% compared to April.
As for the current technical picture of the EURUSD pair, it remained unchanged. Buyers need a confident breakdown and consolidation above the intermediate resistance level of 1.1660. Only a breakthrough in this range will allow us to count on a further upward trend with the update of the highs of 1.1720 and 1.1780.
The Australian dollar strongly strengthened against the US dollar and continues to maintain an upward trend. The pair received support after the decision of the Reserve Bank of Australia to keep interest rates unchanged. Thus, the key interest rate was maintained at 1.5%.
The RBA said that the rates correspond to the forecasts of GDP and inflation. It is expected that the reduction of unemployment and the return of inflation to the target level will occur gradually. Also, the central bank predicts a further decline in the unemployment rate and inflation in 2018 at a level slightly above 2%.
Concerning the risks, it is worth noting that the RBA is concerned about the US foreign trade policy, which makes the world prospects uncertain.
As for further prospects for the recovery of the Australian dollar from a technical point of view, the focus will now be on the range of 0.7430-0.7440. A breakthrough in this level will break the downtrend with a return to the larger levels of 0.7480 and 0.7540.
The material has been provided by InstaForex Company - www.instaforex.com