The US dollar rose strongly against the euro and the British pound in trading on Friday due to good fundamental statistics, as well as in anticipation of a rise in interest rates in the United States, which is scheduled for December 19.
Excellent reports on retail sales and industrial production in the United States once again convinced investors that the US economy might be able to avoid a recession until 2020.
According to a report by the US Department of Commerce, consumer spending rose in November of this year amid holiday purchases before Christmas. According to the data, retail sales grew by 0.2% in November of this year and amounted to 513.5 billion dollars. Economists had expected an increase of only 0.1%. Compared to the same period of the previous year, sales increased by 4.2%.
As I noted above, a good growth in industrial production in the United States in November indicates the excellent state of the American economy, which is likely to continue its growth further. The increase in production was due to increased demand for utilities.
According to the Federal Reserve, industrial production in the United States in November of this year increased immediately by 0.6% compared with the previous month, while economists expected it to increase by only 0.3%. Compared to the same period of the previous year, production increased by 3.9%.
Despite a good overall figure, it is worth noting that manufacturing industry, which accounts for the lion's share of the country's total industrial production, remained unchanged in November. Growth was noted at 1.7% in the mining sector, and the maximum was recorded in the utility sector, where production increased immediately by 3.3% compared with the previous month.
Inventories in the US also showed growth. As indicated in the report of the US Department of Commerce, reserves increased by 0.6% to $ 1.982 trillion. Economists had forecast growth of 0.6%.
As for the current technical picture of the EUR / USD pair, the serious fall of the euro will not pass without a trace. Given that traders are waiting for interest rate hikes from the Federal Reserve System this week, short-term demand for the dollar may continue.
The breakthrough of the intermediate support level in the area of 1.1300 will lead to the formation of a new wave of sales of risky assets, which will return the trading instrument to the lows of this month in the area of 1.1260. The upward correction in the euro, which can be observed at the beginning of this week, will be limited to large resistance levels around 1.1340 and 1.1360.
Great Britain
The British pound, meanwhile, is also losing ground against the US dollar, after the British Prime Minister Theresa May again failed to find a "common language" with the leaders of the EU countries at a meeting that took place last week in Brussels. This suggests that May has once again failed to achieve a mitigation of the terms of the Brexit agreement, as well as resolve the issue with the Irish border.
The reports said that May was unable to clearly articulate to the EU leaders what guarantees she needed for the British Parliament to approve the agreement. European Commission President Jean-Claude Juncker stated that none of the leaders agreed to revise the Brexit agreement in any form. At the same time, the President of the European Council Tusk noted that he does not have a mandate from EU leaders to organize further negotiations on Brexit, but the EU is always ready for further discussions of conditions with the British Prime Minister.
With regard to the technical picture of the GBP / USD pair, a breakthrough of support levels around 1.2570 and 1.2525 will lead to a new large wave of sales of the pound with the update of the next lows in the area of 1.2480 and 1.2430, which will form a new downtrend in the trading tool. The upward correction of GBP / USD will be limited by a large resistance level of 1.2670, where the upper limit of the current wide side channel is located.
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