The euro is steady against the U.S. dollar on Friday as disappointing data on consumer sentiment in the U.S. boosted demand for the dollar, while concerning about the violence in Iraq continues to exert pressure, say Forex experts.
The preliminary report of the University of Michigan said its index of consumer sentiment fell to 81.2 this month from 81.9 in May, whose figure was revised up from the previously projected 81.8. Analysts had expected the index to rise to 83.0 in June. Earlier on Friday, the official data showed that producer prices in the U.S. fell in May by 0.2%, confounding expectations for a gain of 0.1%, after a 0.6% increase in the previous month. Producer price index, excluding food and energy fell by 0.1% last month, compared with expectations of an increase by 0.1%, after rising in April by 0.5%.
Meanwhile, market sentiment remained under pressure after President Obama warned about possible military strikes on Iraq after Sunni Islamist uprising, which began to spread rapidly across the country. Later on Thursday, the Kurdish forces in the north took control of the city of Kirkuk, to protect it from the Islamists, say the Forex experts.
The single currency gained some support on Thursday after the release of the data, which showed that industrial production in the region increased by 0.8% in April, exceeding the projected increase of 0.4%. The March figure was revised down to 0.4% from a previously reported 0.3%.
EUR/USD formed a small local maximum
The price for the euro on June 13, as expected, formed a small local maximum, and it is likely that it has completed a local correction. Presumably, or have completed the formation of the first part of a pattern in the form of a 5-3 formation. If this assumption is true, then, any increase in the pair should be used to find an entry point to short positions. It is therefore recommended with the price increases to the level of 1,3575-1,3585 search terms to open short positions with the targets in the area of 1,3480-1,3450 and protective stop orders for losses place the level of 1.3630.
