Dollars Benefits from Excessive Euro Liquidity

EUR/USD hit its new significant bottom near 1.3455 level after dollar continued to grow on the high Euro liquidity level and good economical releases from U.S. Next technical support for EUR/USD lies near 1.3330 mark, so it is reasonable to expect some more USD rallying by the end of this week or next week.
Consumer Price Index (CPI) report, released by Bureau of Labor Statistics, showed 0.1% growth in July (as expected) compared to 0.2% growth in June.
Industrial Production report didn't make any surprises too and came out with a 0.3% growth in July (in June it grew by 0.5%).
Net Foreign Purchases in July fell by $5.2B compared with June number and came out at $120.9B level, which is still historically high.

Mixed Data from U.S. Again

Some more mixed data followed yesterday's PPI and industrial production today. Their affect on EUR/USD could be noticed as it rallied to new decade maximum on 1.3832 and then returned back below the crucial 1.3800 mark. Consumer Price Index was released slightly better than consensus (0.2% against 0.1%, while it was quite low compared to previous 0.7% rise in June 2006). As for real estate sector - a decline in building permits was dubbed with the increase in new housing starts. Business crude oil inventories were also released today and they showed a decline in 449,000 barrels for the last week. FOMC minutes will be released tomorrow and all Forex traders will listen carefully what Ben Bernanke has to say about U.S. economy so far. Some very high volatility can be expected tomorrow.

Euro Rallies as the Fundamentals Are Not In Dollar's Favor

EUR/USD today on Forex rallied high to 1.3380 level as the fundamental indicators from U.S. came below expectations. First, May Core CPI came at 0.1% level, whereas expected value was 0.2% (though, overall CPI was 0.1% higher than expected). Then, Industrial Production showed completely no increase in May which can be very for the U.S. GDP. Industrial Capacity Utilization was also lower than expected - 81.3% against 81.6%. And at last - Michigan University Consumer Sentiments Index (preliminary) decreased in May to 83.7, whereas experts expected 88.0. Such a bad day for the U.S. macroeconomics can be a sign to FOMC, which might start considering interest rates lowering.

CPI from US to Support Dollar?

Today the April U.S. CPI data cam out a bit higher than the market expected - 0.6% against 0.5%. A higher CPI data can mean a fast increase of the U.S. interest rate by the Fed, which in its turn gives USD a support to rally higher against other currencies. But all in all 0.1% difference can be not enough to significantly move the Forex market in any direction, so it's better to wait for more macroeconomic data.

Pound Breaks $2 Level

Today after CPI report came out to be higher than expected (Consumers Price Index in March (YoY) reached 3.1% against expected 2.8%), GBP/USD broke through the historical $2 level and is floating now in 2.0030-2.0070 range - the highest since 1981. Looks like bad times for USD have came. On the other hand it's nearly a perfect time to enter long on USD, because the correction will certainly follow. Though, Forex market can't be treated that simple.