07.09.201814:14 Forex Analysis & Reviews: Demand for the euro will continue

Long-term review

The euro remained in a narrow lateral channel paired with the US dollar after the release of a number of fundamental statistics, evidence in favor of strengthening the US economy.

Data on Germany disappoint investors.

According to the report, orders in the manufacturing sector of Germany fell again, which is a bad sign for industrial production. According to the Federal Bureau of Statistics, orders in the manufacturing sector in Germany in July 2018 decreased by 0.9% compared to the previous month. In June, orders were reduced by 3.9%.

A good report from the Institute of Economic Studies Ifo allows you to count on the further growth of the German economy. It says that thanks to a strong labor market and increased private consumption, Germany's economy may grow by 1.9% this year. However, this is lower than in 2017, when growth was 2.5%. Ifo also noticed that low-interest rates stimulate investment.

Data on the US did not lead to significant changes in the market.

According to the report of the US Department of Labor, the number of initial applications for unemployment benefits for the week from 26 August to 1 September decreased by 10,000 and amounted to 203,000. Economists had expected the number of applications to be 211,000.

Labor productivity in the US continued to grow.

According to the report of the Ministry of Labor, labor productivity outside of US agriculture in the second quarter of 2018 increased by 2.9% compared with the previous quarter. The data fully coincided with the forecast of economists and therefore did not lead to the strengthening of the US dollar. In comparison with the same period of the previous year, productivity grew only by 1.3%

Meanwhile, unit labor costs for the period from April to June decreased by 1.0% compared with the first quarter. Economists predicted that the figure will decrease by 0.9%.

According to the report of the US Department of Commerce, orders for manufactured goods in July 2018 decreased by 0.8% compared to the previous month, to 497.75 billion US dollars. Economists had expected a decrease in orders of 0.6%. In general, the decrease was due to a sharp drop in orders for civil aircraft and defense products, while orders for short-term goods rose 0.2% in July.

As for the technical picture of the EUR / USD pair, the potential for growth of risky assets remains. The breakthrough of resistance 1.1650 will be a good signal for the growth of long positions in the euro, which will lead to the renewal of the highs around 1.1690 and 1.1730. Despite the positive signals for buyers, the situation can quickly change after the report on the number of employees in the non-agricultural sector. Weak indicators on the US labor market may put even more pressure on the US dollar.

Exchange Rates 07.09.2018 analysis

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Jakub Novak,
Analytical expert
InstaForex Group © 2007-2021
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