EUR/USD: stagnation of inflation expectations in the eurozone since January
The EUR/USD currency pair shows an ambiguous movement, being near the level of 1.0860. Market activity is restrained, as traders expect new factors that could set the direction of movement.
On Wednesday, July 31, investors' attention will be focused on July inflation data in the eurozone. Annual inflation growth is expected to slow from 2.5% to 2.3%, and the core index excluding the cost of food and energy will decrease from 2.9% to 2.8%. At the same time, consumer inflation expectations in the eurozone have not improved for the first time since January, as ECB data show, indicating ongoing risks and difficulties with a rapid return of consumer price levels to the 2.0% target. ECB officials predict that inflation will reach 2.8% over the next 12 months, remaining at the level of the previous month, while the three-year forecast remains at 2.3%. Over the past 12 months, perceived inflation has decreased from 4.9% to 4.5%.
- Resistance levels: 1.0869, 1.0900, 1.0930, 1.0964.
- Support levels: 1.0844, 1.0820, 1.0800, 1.0765.
GBP/USD: according to a Reuters poll, 80% of respondents expect a rate cut in August
The GBP/USD currency pair is experiencing an upswing, continuing the weak corrective growth that began at the end of last week, when the pair bounced off the lows on July 11. At the moment, the pair is trying to break above the 1.2875 level, while investors expect new catalysts for movement.
The US dollar is feeling pressure after the publication of Friday's inflation data in the United States: the core index of personal consumption expenditures in June rose from 0.1% to 0.2%, remaining at an annual level of 2.6%, despite forecasts of a decline to 2.5%. Five-year inflation expectations measured by the University of Michigan increased from 2.9% to 3.0% in July. This small increase is unlikely to affect the next decisions of the US Federal Reserve System, whose representatives have already noted that it would be a mistake to rely only on these indicators. A meeting of the American regulator will be held next Wednesday, but analysts do not expect significant statements from it. Of greater interest is the meeting of the Bank of England scheduled for Thursday, August 1, where more and more experts predict an interest rate cut of 25 basis points to 5.00% due to slowing inflation. A Reuters poll showed that 80% or 49 out of 60 economists expect the British regulator to cut the rate in August, with the current rate level at 5.25% after 14 consecutive increases. However, before the latest inflation data, 97% of respondents anticipated this correction.
- Resistance levels: 1.2900, 1.2948, 1.3000, 1.3050.
- Support levels: 1.2860, 1.2817, 1.2776, 1.2730.
USD/CHF: the rate reaches the support of the descending channel 0.8920–0.8670
The USD/CHF currency pair shows a corrective movement, being at the level of 0.8829 against the background of weak dynamics of the US dollar.
The Swiss franc continues to strengthen its position thanks to recently published economic data. After reaching the minimum levels, the main sectors of the Swiss economy began to show signs of recovery. This Wednesday, investors will focus on the July index of leading leading indicators from the Swiss Economic Institute (KOF), which includes twelve indicators such as consumer confidence, manufacturing activity, new orders and the situation in the real estate market. The index is expected to remain at 102.6 points, which is the highest value since February 2022 and indicates a gradual recovery in economic activity in the country. In the second half of the week, inflation data will be published, which may prompt officials of the Swiss National Bank to reduce the interest rate from the current 1.25% to 1.00%. This will be the second consecutive rate cut if the consumer price index falls below the 1.3% level.
- Resistance levels: 0.8880, 0.9040.
- Support levels: 0.8800, 0.8660.
NZD/USD: Living in New Zealand rose 5.4% in the second quarter
The NZD/USD currency pair is losing ground, being at the level of 0.5888, under the influence of stable dynamics of the US dollar and disappointing statistics from New Zealand.
The housing price index (HLPI) for the second quarter showed a decrease from 6.2% to 5.4%, compared with the previous figure of 8.2%. The main impact on the index change was made by interest payments (26.7%), private transport costs (13.0%) and insurance services (18.0%). Despite the decrease in inflation from 4.0% to 3.3%, the New Zealand dollar did not receive support, as the growth in total spending still significantly exceeds the rate of price decline, which limits the opportunities for economic activity to recover.
- Resistance levels: 0.5910, 0.6010.
- Support levels: 0.5870, 0.5790.