The US dollar lost a number of positions to the euro and the British pound, despite a good report on the growth of the US economy in the second quarter of this year. The outlook was slightly worse than the economists' expectations, and weak data on consumer confidence led to profit fixation in the short positions of the EURUSD pair.
According to the report of the US Department of Commerce, the US economy in the second quarter showed an excellent growth rate, which is directly related to an increase in consumer spending, as well as an increase in exports. A good inflow of capital investment companies also made a significant contribution to GDP.
So, according to the data, US GDP for the 2nd quarter of 2018 grew by 4.1% per annum, whereas in the 1st quarter, according to revised data, GDP grew by 2.2%. Economists expected GDP growth of 4.4% in the second quarter. Compared to the same period of the previous year, GDP growth was 2.8%.
Such data, along with a gradual increase in consumer prices and the labor market, allow the US Federal Reserve to continue raising interest rates this year. A number of representatives of the Federal Reserve have repeatedly noted the need to further raise rates to prevent overheating of the economy.
Most likely, the US Federal Reserve will leave its key rate unchanged at the next meeting next week, but in September it will again increase it by a quarter of a percentage point, after which the range of rates will be 2% -2.25%.
Immediately after the report on economic growth, US President Donald Trump said that he said he expects further economic growth, which will be much faster than before. According to Trump, annual GDP growth may be 3% or higher, as currently, the monthly growth is very, very stable.
The pressure on the US dollar was provided by data on a small decrease in the consumer confidence in the US in July this year. According to the report, consumers have become less positive about the economic situation due to the trade policy of the White House.
So, the final consumer sentiment index of the University of Michigan in July 2018 was at the level of 97.9 points against 98.2 points in June this year. Economists predicted that for July the value would be 97.3 points against the preliminary value of 97.1 points.
As for the technical picture of the EUR / USD pair, it should be noted that the trade is conducted in the middle of a wide side channel, to which I have drawn attention in my past reviews. The lower support range of this channel is located in the area of 1.1575-1.1595, while the upper range is perfectly visible in the area of 1.1730 - 1.1750.
The material has been provided by InstaForex Company - www.instaforex.com