EUR/USD To Break Above 1.3850?

After the Federal Open Market Committee released its statement yesterday EUR/USD remained on its positions until today's early European session, which brought Euro to a rally behind the crucial 1.3800 mark. Will EUR/USD stay above it? Probably. Will EUR/USD break the 1.3850 resistance barrier to soar high to 1.4000 level? Less probably. Let's look on the fundamentals.
Yesterday a labor productivity data for the industrial sector came out lower than expected by the majority of traders - 1.8% increase, instead of 2.1%. Meanwhile, consumer credit for June this year increased by 13.2 billion dollars, while analysts were expecting 6 billion dollars increase.
FOMC released another 'inflation-concerned' statement, leaving the interest rates at 5.25% level. While the main concern for the FOMC remains the inflation, it started to get nervous because of the risks connected with the economical growth and especially housing crisis.
Today data on business wholesale inventories came out slightly better than predicted - increased by 0.5% instead of 0.4%, while the crude oil inventories again dropped down significantly - by 4.1 million barrels.
Despite of FOMC being more inflation orientated, the economical growth correction will probably make them to decrease the interest rates at least once (or at least stop increasing it even more). Currently, housing data and oil inventories (taking in mind current oil prices) don't look very promising for the U.S.

Dollar Struggling Below 1.3700

Another day marked by U.S. dollar's struggle to hold below the 1.3700 mark and get out of the bearish trend. EUR/USD is waiting for more bull power before turning back to rising or is just being corrected by some good yesterday's economical news from United States.
ISM reported on Manufacturing PMI in July disappointed many dollar bullish traders as it came out at 53.8%, below the 55.5% expected, showing some possible problems in the manufacturing sector of the U.S. economics.
Previous week's oil inventories report showed a great decline of 6.5 million barrels of crude oil, while commercial petroleum inventories fell by 0.7 million barrels. But total present volumes of inventories remain satisfactional.
Today's news are less encouraging than usually - but one day doesn't mean a lot in the economics. Further news releases will tell us what to expect from U.S. economy and USD.

EUR/USD Drops Down With Bad Data on Housing and Oil Inventories

EUR/USD today is showing a very intensive bearish rally dropping to 1.3700 level after failing to take over the 1.3850 resistance mark. The major reason for such market behavior can be seen in a technical correction which should have came after the overbought condition in EUR/USD reaches its peak. Personally I thought that this correction will come a bit later letting the EUR/USD to get higher before falling down, but market is market - U.S. dollar is rallying despite of bad macroeconomic statistics which came out today.
Existing home sales - a major indicator of the U.S. economy since the crisis in the real estate sector began earlier this year - came out at 5.75 million units - below the expected 5.90 million and below the previous number of 5.98 million in May.
Crude oil inventories in the week ending on July 20 declined by 1.1 million barrels, while the motor gasoline inventories rose by 0.8 million barrels and distillate fuel inventories increased by 1.5 million barrels.

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.