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The euro and the pound rose sharply only after Fed Chairman Jerome Powell's speech in the US Congress, while reports on France's industrial production and UK GDP growth in the first half of the day were almost ignored by traders.
According to data, industrial production in France in May this year increased more than economists had expected. Thus, industrial production in May increased by 2.1% compared to April this year, where the data were revised upwards to +0.5%. Economists had expected growth to be only 0.2% in May. Compared to the same period in 2018, industrial production in France increased by 4%.
The strongest growth was observed in the mining and energy industries.
Today, the European Commission also published a report, according to which economists continue to forecast GDP growth in the eurozone in 2019 at 1.2%, while the forecast for 2020 was revised downward to 1.4% from 1.5%.
As for the flagship economy of the eurozone – Germany, the European Commission also reduced the growth forecast in 2020 to 1.4% from 1.5%.
As noted, the growth of the European currency resumed after the speech of Fed Chairman Jerome Powell, who, although he did not speak directly about lowering interest rates but made it clear that he was not happy with the current situation in the economy.
During his speech in the US Congress, the Fed Chairman said that since the June meeting, uncertainty continues to put pressure on the prospects of the US economy, but the basic scenario assumes that economic growth will remain strong.
In his opinion, the risks associated with trade tensions, global economic growth, and low inflation are a key problem for the Fed, so the uncertainty of prospects has increased in recent months. By "uncertainty of prospects", most likely, the Fed Chairman meant the situation with the current interest rates.
Jerome Powell also touched on Friday's report on the US labor market, saying that the situation remains favorable, but the advantage of a strong labor market in recent years has received more attention than was necessary.
Now, according to the head of the Fed, the main risk is weak inflation, which may be more stable than expected.
At the end of his speech, Jerome Powell said that he expects a slowdown in US economic growth in the 2nd quarter of this year, which finally undermined the position of the US dollar against a number of world currencies.
As for the technical picture of the EURUSD pair, a reversal and completion of the downtrend are planned, but this requires consolidation above the resistance of 1.1240, which will push new buyers of risky assets to the highs of 1.1270 and 1.1300.
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