03.07.201908:01 Forex Analysis & Reviews: EURUSD: There is no need to reduce interest rates in the United States. UK economy may slow down

The euro remained to trade in a narrow side channel paired with the US dollar against the absence of important fundamental statistics, and the British pound collapsed after the speech of the Governor of the Bank of England.

The pound did not withstand the pressure of major players and continued to decline against the US dollar after Mark Carney said that the risk of a trade war threatens the growth of the global and British economies. This shifts even further the expectations of traders that the English regulator will increase interest rates even in spite of the situation with Brexit. Carney is also excited by the fact that the likelihood of trade wars remains quite high, and the risk of a British exit from the EU without a deal has seriously increased. Carney also admitted that market expectations regarding the Central Bank's position on monetary policy are at odds with the expectations of the Bank of England.

Today in the first half of the day, a rather important report on the service sector index will be published, which can keep bearish moods in the British pound. The breakthrough of the next support level of 1.2580 will lead to a further downward trend in the trading instrument with access to the lows of 1.2540 and 1.2500.

As noted above, the European currency remained to trade in a narrow side channel paired with the US dollar. Data on retail sales in the US from Redbook were ignored by the market.

According to the report, retail sales in the US for the week from June 23 to June 29 increased by 5.5% compared to the same period of 2018. In total, for the 4 weeks of June, sales fell by 2.4% compared to May, but increased by 5.2% compared to June last year.

A speech by the president of the Federal Reserve Bank of Cleveland, Loretta Mester, helped the US dollar maintain its upward potential against risky assets.

Mester said that it was too early to say what would happen next with interest rates, but if the prospects deteriorated, it could be an argument in favor of lowering them. On the other hand, according to the head of the Federal Reserve Cleveland, it is unclear whether the economy will be able to help lower rates at the moment, as it will create additional financial imbalances.

Mester is confident that the US economy will remain on the path of strong growth, but it is already clear that the risks for future prospects have seriously increased.

As for the technical picture of the EURUSD pair, the bears should count on a break of support at 1.1275, which will lead to a larger downward bearish impulse paired with a minimum of 1.1240 and 1.1200. In the upward correction scenario, a large resistance is seen around 1.1340.