The Eurozone economy recovery slows down
The U.S. dollar was hit by the GDP report for the 1st quarter which had shown a stronger than analysts had expected the U.S. economy reduction. The GDP decline was 2.9%, the worst figure, starting with the I quarter of 2009., when GDP fell by 5.9% immediately. It should be noted that any weak data from the United States are to maintain the current interest rates low levels providing a long-term background pressure on the dollar.
The Wednesday's maximum of 1.3650 awaits a renewed pressure after a strong recovery from 1.3576 last Thursday. The break above 1.3642 will target the pair to 1.3650 high, threatening with a further growth towards the resistance of 1.3677/91. The support of 1.3612 and 1.3604 should be broken again to aim the pair to the minimum of 1.3576.
The Bank of England will not raise its interest rate to a level previously considered "normal" for the foreseeable future. This was stated by the regulator Mark Carney. In a BBC interview Carney said that some factors would adversely affect the economy in the coming years. Among them is the high level of household debt. He expects demand for exports UK is likely to remain weak as a result of the economic difficulties of the Eurozone, while the pound is likely to remain strong.
The pair is again targeting the last week high of 1.7060, the lowest level in 5.5 years. We expect a break above this level. The break above 1.7060 may send the price to the target levels of 1.7115 and 1.7223, the latter of which is a wave equality target from the "bullish wedge" minimum of 1.6694 in late May. The inability to break above 1.7062 will cause a weakness towards 1.6952, but only within the broader bullish continuation pattern.
Japanese yen slightly strengthened against the U.S. currency against amid the Japanese investors’ interest in foreign securities buying and the dollar weakness after the U.S. GDP data for the first quarter turned out to be bad.
Last Friday decrease targeted the pair to the level of 100.97. The pair needs to return above 101.73 to get a respite, but only trading above 101.91 will return bulls to the market.
Ruban SergeyAnalyst of «FreshForex» company
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