The US Dollar has climbed heavily against few major currencies, including the Euro, the New Zealand Dollar, the Swiss Franc and the Japanese yen. The Forex market volatility was on the lower side for the last couple of weeks. However, it seemed to have picked up since the start of this week. Yesterday’s risk events triggered a rise in the US dollar. The biggest loser turned out to be the Euro, which traded below the 1.3550 support level.
Today, during the New York session, the US Producer Price Index was released by the Bureau of Labor statistics, Department of Labor. The forecast was slated for a 0.2% rise in the PPI in June 2014. However, the outcome was on the higher side, as the US PPI rose 0.4% in June 2014 in the seasonally adjusted terms. Moreover, when we speak of year-over-year change, then the US PPI rose by 1.9%, which matched the market’s expectation. The outcome somehow boosted the US dollar initially, but the US dollar was seen correcting recent gains against most major currencies.
US Industrial Production
The US Industrial Production data was also published about an hour later by the Board of Governors of the Federal Reserve. The market was expecting the US industrial production to rise by 0.4%, compared to the 0.5% of the last time. However, the report published disappointed the dollar buyers as the US industrial production increased only by 0.2% in June 2014. Moreover, it registered an advance of an annual rate of 5.5 percent for the second quarter of 2014. The highlight of the report was that the manufacturing output gained 0.1%, which is the fifth consecutive monthly gain. However, the miss in the forecast might be seen on the negative side by the dollar buyers.
Technically, the EUR/USD pair fell close to the 1.3530 support area where buyers appeared to contain the downside in the pair. However, the most important point to note from the charts is that the pair has now formed two solid bearish candles on the daily chart, which can be considered as a negative sign in the short term. There is an important swing support area around the 1.3500-10 levels. It would be interesting to see how the pair reacts around the mentioned levels if it reaches there. Overall, the market sentiment remains bearish for the pair.