20.04.201811:14 Forex Analysis & Reviews: The euro has problems with further growth

Good data on the American economy, albeit not so important, was released on Thursday afternoon, which supported the US dollar, as did the Fed representatives who talked about the need to further raise interest rates.

According to the report of the Federal Reserve Bank of Philadelphia, production activity in April continued to grow. Thus, the leading index of business activity in April rose to 23.2 points against 22.3 points in March. Economists had expected the index to be 20.1 points.

The Conference Board's Index of Leading Indicators in March also showed growth. According to the report, the index rose by 0.3%, to 109 points, which fully coincided with the forecasts of economists.

As I noted above, the speech of the representatives of the Federal Reserve also provided support to the US dollar.

Loretta Mester stated the need for further rate hikes to keep the economy recovering. In her opinion, raising rates will keep the economy from overheating. Mester also expects that the unemployment rate will fall below 4% this and next years, and the economy will grow by more than 2.5% in 2018. As for the level of inflation, then, according to the representative of the Fed, it will return to 2% in the next few years.

Let me remind you that yesterday there were data that indicated a decrease in the positive balance of the current account of the euro area's balance of payments. In this regard, the new German Finance Minister Olaf Scholz criticized the trend of a return to protectionism and nationalism from the US. Yesterday, he made a visit to Washington and spoke in favor of a compromise with the United States on the introduction of trade duties and new tariffs on imports, proposed by President Donald Trump.

As for the technical picture of the EURUSD pair, the situation is on the sellers side. The inability of buyers of risky assets to get beyond the resistance of 1.2395 led to the selling of the euro with a return to the lower boundary of the side channel. Now the main goal for short positions in the trading instrument will be the area of 1.2300, and its breakthrough will lead to a break in the upward trend in the euro, which was formed earlier this month and update levels 1.2260 and 1.2220.

The Japanese yen declined sharply against the US dollar after data showed that Japan's core inflation in March this year showed restrained growth. According to the report of the Ministry of Internal Affairs and Communications, the base consumer price index rose by 0.9% in March this year compared to the same period of the previous year. The data fully coincided with the forecasts of economists.