FX.co ★ The growth potential of the euro is limited

Good data on the euro area and the ongoing problems of the US president's administration led to the growth of the euro yesterday. It was partially won back at the Asian session today.

Many experts attribute the fall of the US dollar to the uncertainty surrounding the administration of Donald Trump and his plans to stimulate economic growth.

Most recently, the US president said that he can suspend government work if the financing of the wall construction between the US and Mexico will not be approved. Such a statement immediately affected the investment climate, which is already in a very "delicate situation" after the reduced likelihood of an increase in interest rates from the Fed this year. Particular attention is focused on tomorrow's speech of the Federal Reserve Bank head, Janet Yellen, and her statements on this matter. Moreover, market participants will closely follow the speech of the ECB president, which may touch upon the issue of winding down the program of bond redemption.

It did not help the US dollar that the data indicated an increase in activity in the US services sector.

According to the IHS Markit report, the composite preliminary index of supply managers in August this year rose to 56 points against 54.6 points in July. It is to be noted that a value above 50 indicates an increase in activity. The main support for the index was the growth of new orders, which experts attribute to the favorable economic situation.

Today, attention will be turned towards the publication of data on the US labor market, which can once again support the US dollar.

As for the technical picture of the EURUSD pair, one can hardly expect to maintain a stable upward trend. This is because trade is conducted in the area of important resistance levels that coincide with the upper boundary of the wide side channel which was formed since the beginning of August this year. The renewal of resistance at 1.1800 could lead to a larger euro growth in the area of 1.1840, but no more than that. Only a new information can provide an opportunity that will to lead to a stronger demand for risky assets with the renewal of the pair to the level of 1.1880. Pressure on the euro could rise in the event of an unsuccessful attempt to rebound from 1.1780, This will lead to a return to the area of yesterday's low, where the support level was at 1.1750.

The price of oil rose yesterday after the US Department of Energy reported a fall in the data of commercial oil and gasoline stocks.

The reduction of commercial oil reserves amounted to 3.3 million barrels, which only exceeded the forecast of analysts. Gasoline stocks fell by 1.2 million barrels, while analysts expected a decrease of only 500,000 barrels. The reserves of distillates remained almost unchanged.