The US Industrial Production and Capacity Utilization both declined in October, according to data released this afternoon by the US Federal Reserve. Industrial production posted a 0.8% decline; the most that this data has declined in 18 months. This was greater than the 0.4% decline the market expected and also more than the 0.3% decline seen in September.
Capacity utilization rate was also 76.7%, more than the 77.2% which the markets expected and more than the reported utilization in September of 77.5%.
The US-China trade war as well as the strike at General Motors which has led to a cut in vehicle production, have been identified as the factors behind the downbeat figures. In fact, the drop in vehicular output was registered at 7.1%, the highest since January.
The two data sets do not have much market impact. However, the EURUSD has picked up steam on the news, and is trading at intraday highs of 1.10439.
A look at the daily chart shows that price has bounced off the upper border of the long-term down channel that was broken to the upside by the daily candle of October 17. Price has since formed a double top, which was confirmed by the downside break of the neckline at 1.10657. The measured move from the double top has been completed, and without further downside momentum, price has turned upwards and is now pushing towards the double bottom’s previous neckline.
A break of the neckline by continued bullish momentum targets 1.1113 (July25 and September 13 high) and 1.11647 (previous double top). Rejection at 1.10657 opens the door for a retest of the 1.1015 price level (23.6% Fibonacci retracement level).More content