What will perform the function of opening the network mechanism and stop output of the most popular strategies in this year, based on QE program in Europe?
On the role of this mechanism claim a number of factors. In this respect, the most common theory is that as soon as the technical positioning is fully adjusted, the market will be stabilized. Among the potential fundamental reasons:
1) regular price decline in oil
2) changes in the financial conditions under the influence of market positioning, in spite of the real economy state and the intentions of the European Central Bank. As an example, the unexpected strengthening of the euro, rising bond yields, the decline in the stock markets and the rise in oil prices a few weeks leveled a large part of the stimulating effect of the monetary policy of the ECB. In the same way the tightening of fiscal policy in the US has limited the development of the positive dynamics of the US dollar. The euro follows the same way. Tightening of financial conditions has a negative impact on the dynamics of the single currency. Financial markets shows limited negative interest rate policy in the euro area and thus support the euro afloat. At the same time, recent events make it clear that large-scale trend of the dollar depends on the direction in which the Fed moves, not on what other central banks are taking.