Trading in EURUSD pair remains in the side channel.
On the one hand, the dollar is supported by good fundamental data on the US economy, which were published yesterday. On the other hand, today's report on US GDP in the 1st quarter of this year can cause a lot of trouble for traders. Weaker than expected data will lead to a sharp closure of long positions on the US dollar and EURUSD growth in the short term. However, this is unlikely to seriously affect the more medium-term downtrend.
Yesterday's report on production activity in the area of responsibility of the Federal Reserve Bank of Kansas City was ignored by traders.
According to the data, activity in the sector was restrained by bad weather, in connection with which the composite production index, including employment and production, in April 2019 amounted to 5 points against 10 points in March. Fed-Kansas City said that about a third of firms reported a negative impact on their activity in severe weather conditions.
The index of industrial production in April was 22 points against 27 points in March, the composite index of expectations in April fell to 11 points from 22 points in March.
As for the technical picture of the EURUSD pair, as noted above, the main movement in the next few trading days will be based on US GDP data. If the estimate coincides with economists' forecasts, the demand for the US dollar will return, but it is unlikely to last long. Therefore, an unsuccessful breakthrough of the level of 1.1120 may lead to profit taking on short positions in the trading instrument at the end of the week and, accordingly, to a larger upward correction in the middle of the channel 1.1150 and to its upper border 1.1180. If the report turns out to be worse than economists' forecasts, and GDP is expected to grow by 2.2%, then the demand for risky assets may increase, which again will lead to rapid growth of EURUSD in the area of maximum 1.1180.
The Japanese yen strengthened its position in pair with the US dollar after the release of a good report on inflation, which pointed to the April growth of the consumer price index in Tokyo.
According to the data, the consumer price index CPI of Tokyo in April this year increased by 0.3% compared to March, while compared to the same period in 2018, inflation increased by 1.4%.
The base consumer price index, which does not take into account the volatile categories of goods, rose by 1.3% per annum in April, while economists had expected growth of only 1.1%.
The unemployment rate in Japan rose slightly stronger to 2.5% in March, while economists had expected growth to only 2.4%, from 2.3% in February.
The material has been provided by InstaForex Company - www.instaforex.com