The upside potential of the euro today is limited by significant levels of resistance, and weak data on the eurozone economy make investors cautious of new purchases of risky assets.
According to the data, in July of this year, Germany's imports increased sharply, which affected the surplus. Thus, imports grew by 2.2%, while exports showed growth of only 0.2%. The positive balance of Germany's foreign trade in July fell to 19.5 billion euros, from 21.1 billion euros in June. Economists predicted that the surplus will be at 21.0 billion euros.
Despite a slight increase in imports, it is worth noting that Germany's economy "excellently" copes with a fairly high euro rate, which has strengthened recently against most of the world's currencies.
The "headache" of the European Central Bank is now the high rate of the single European currency, which can harm exports and weaken the potential growth of the economy. However, during yesterday's press conference, ECB President Mario Draghi did not express serious concern about this. Compared to July 2016, Germany's exports increased by 8%, and imports rose by 9.4%.
Industrial production in France increased in July, but the data turned out to be worse than economists' forecasts. According to the report of the National Statistical Agency Insee, industrial production increased by 0.5% compared with June, while economists expected a higher indicator growth of 0.7%.
As for the technical picture and the further prospects of the EURUSD pair,it was discussed with more detail in the morning review. Returning to the buying of the euro in the short term is best after upgrading the level of 1.2015 or after returning to the larger support of 1.1940, which has been resisting throughout this week. A sharp increase and breakdown of the level of 1.2100 will indicate continuation of the formation of a bullish momentum in the pair.
The British pound strongly strengthened against the US dollar, after the growth in manufacturing in the UK has accelerated. According to the data, the volume of production in the manufacturing industry in the UK in July this year compared with the same period in 2016 increased by 0.5%. Economists had expected that production in the manufacturing industry would grow by 0.3%.
Compared to June, the UK industrial production grew by 0.2% against a 0.4% growth forecast.