Article by ForexTime
The dollar is stronger on Friday as yields continue to gain traction following the Federal Reserve decision on Wednesday. The currency pair moved higher initially in Asian trading after a report that showed that Scotland had voted “no” on independence. The Fed’s statement this week has given an underpinning to the dollar, with the combination of the dovish tone from Fed Chair Janet Yellen, yet hawkish undertones about how the Fed would begin the process of normalization.
In economic news, German producer price inflation held steady at -0.8% year over year in August unchanged from July and with prices down 0.1% month over month. Lower energy prices as well as a sharp decline in prices for mining products are keeping the annual rate at very low levels and PPI excluding energy ticked up to a still low 0.2% year over year from 0.1% year over year in the previous month.
Catalonia is still pushing on with independence vote, despite “No” in the Scottish independence. Catalan President Mas said it is a mistake to think the outcome of the Scottish referendum casts a shadow over Catalonia, adding that a similar referendum is the only way to resolve conflicts with the regions in Spain.
The Eurozone registered current account surplus of 18.7 billion in July, little changed from 18.6 billion, with the latter revised sharply up from 13.1 billion reported initially. The breakdown showed a sharp decline in the trade surplus, which was compensated by a strong pick up in the services surplus. Unadjusted data show a surplus of 233.6 billion in the 12 months to July compared to a surplus of EUR 200.4 billion in the corresponding period last year.
The EUR/USD attempted a run at resistance near the 10-day moving average but was unsuccessful. Support is seen near the weekly lows at 1.27. Momentum has flattened with the MACD printing near the zero index level. The RSI has moved lower with price action reflecting accelerating negative momentum while printing a reading at 30 which is the oversold trigger level and could foreshadow a correction.
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