Political Situation In The US Keeps Dollar Under Pressure

OctaFx Analyst Team OctaFX

The USD/JPY is showing a confident descending movement on the background of increased interest in defensive assets after Donald Trump’s advisor on economic issues decided to leave his position. As a result, we see the worsening of the political situation in the US, where the President’s administration is sharply losing support. The Japanese yen is treated as a safe haven assets and political risks in America, a falling greenback and the recent terrorist attack in Barcelona resulted to testing of the local minimum near 108.85.

The common currency keeps consolidating amid contradictory factors. The negative influence of political tensions in the US today was partly offset by the unexpectedly low current account balance in Eurozone, which in June was only 21.2 billion euro against the expected 27.3 billion euro and 30.5 billion euro in May. Some pressure on the EUR/USD quotes came from the preliminary report from University of Michigan on consumer sentiment in the US, which improved to 97.6 in August versus the expected 94.0. The lack of consensus between the FOMC members on the timing of the next rate hike and strong macro statistics in the euro area will support the bulls in EUR/USD.

The Canadian dollar demonstrated positive dynamics despite the falling quotes of oil which is the key export product for the country. Investors positively reacted to the statistics of the consumer price index that showed zero change in July against the 0.1% decline in June. However, we may see the USD/CAD resume growth, after the recent decline, on the background of profit taking.

EUR/USD

The single currency is consolidating near 1.1750. In order to change the current trend to positive, the EUR/USD needs to fix beyond the limits of the descending channel and gain a foothold above the resistance at 1.1800. The target levels in this case will be located at 1.1900 and 1.2000. On the other hand, after the end of consolidation, the decline within the limits of the channel may resume with potential objectives at 1.1620 and 1.1500.

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USD/CAD

The USD/CAD price has fallen sharply after unsuccessful attempt to fix above 1.2665. The immediate goals in case of further decline will be 1.2550 and 1.2470. The RSI on the 15-minute chart has reached the oversold zone that points to a possible rebound upwards within the correction. Additional stimulus for this scenario may come from the fixing of positions ahead of the weekend. In this case the quotes may return to 1.2665.

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USD/JPY

The USD/JPY tested the strong support at 108.85 and if it manages to break through it then it might trigger further price drops to 108.00 and 106.60. In the end of the current trading session we may see profit taking before the weekend. Within such scenario, quotes may return to 108.85 or less likely up to 109.60.

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OctaFx Analyst Team

OctaFX

OctaFX is a market-leading forex broker, providing personalised forex brokerage services to customers in over 100 countries worldwide.

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