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The US dollar remained to trade in the side channel in pair with the euro after the speech of Fed Chairman Jerome Powell, who bypassed the topic of interest rates in the US, apparently, leaving it for today. The data on the US economy did not lead to a surge in volatility, as they were not of particular importance.
According to the report of the National Federation of Independent Business, the small business optimism index in June 2019 decreased by 1.75 points and amounted to 103.3 points. The decline was due to increased uncertainty, as well as a weakening of expectations for sales. The report also noted that six components of the index have deteriorated and three have improved. One remained unchanged.
As mentioned above, on the first day of his speech, Fed Chairman Jerome Powell avoided the topic of interest rates, mainly talking about the stress tests of American banks. In his opinion, stress tests should be improved to avoid the complacency of banks, as well as change every year and take into account unexpected scenarios. Powell also recalled the recent easing in stress tests, which should not be taken "for granted" by banks.
With regard to interest rates, then, apparently, this topic of conversation will be today, so expect volatility in the second half of the day.
As for the speeches of other Fed representatives, the Fed President-Philadelphia Patrick Harker sees no need to change interest rates. In his opinion - the US economy remains strong, and recent data indicate a very strong labor market in the US, and therefore, there is no urgent need to raise or lower rates.
As for the technical picture of the EURUSD pair, it has not changed compared to yesterday. At the moment, the large support is located in the area of 1.1200, the breakthrough of which will provide a further bearish trend by new sellers, whose goal will be the lows in the area of 1.1160 and 1.1110. If the bulls try to correct the situation, the upward correction will be limited by a large resistance in the area of 1.1240, where the upper limit of the downward channel passes.
The Canadian dollar weakened slightly against the US dollar ahead of today's important Bank of Canada interest rate decision, completely ignoring the report on the growth of new home mortgages in Canada in June this year.
According to data from Canada Mortgage and Housing Corp, bookmarks of new homes in June 2019 increased by 26.0% compared to May and amounted to 245,657. Economists had expected the number of bookmarks to reach 209,000 in June.
But construction permits in Canada fell in May. This happened against the background of a reduction in applications for housing construction. According to the data, construction permits in May decreased by 13% and amounted to 8.23 billion Canadian dollars. Economists had expected permits to fall by 10% in May.
Further movement in the USDCAD pair will directly depend on today's decision of the Bank of Canada, as well as on the statements made by the head of the Fed on interest rates. A break in the resistance of 1.1350 will provide a new large growth of the US dollar, while an unsuccessful consolidation above this range will return buyers of the Canadian dollar to the market and lead to a correction of the pair to the support area of 1.3080 and 1.3040.
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