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    The most pessimistic forecast on euro became optimistic in a day

    The most pessimistic forecast on euro became optimistic in a day

    On Friday the common currency continued its fall, testing levels below 1.0600 and didn’t reach just a figure to last local minimums. And it was against the background of lack of significant news. Belief in euro is rapidly fading. The issue is not only about expectations of discrepancies in monetary policy of regulators, but about strong concerns about stability of euro’s zones. Investors ignored the fact that last week Greece had paid regular allocation to IMF. Rumours have already appeared that in the EU the plan is under way to force out Greece of the Eurozone, though the officials deny the existence of such plans. Nevertheless, euro continues to lose weight rapidly not only against dollar, but almost against all remaining world currencies.

    The main question of the week is whether the ECB, which will hold regular session on monetary policy, is satisfied with impetuous fall of euro. No actions are expected from it, but comments on outcomes of the session can have strong influence on trades’ dynamic. This week there are few European economic statistics – trade and payment balances, industrial production and final data on inflation for March. So, for euro, the main uncertainty is hidden in Mario Draghi’s comments. For dollar news background is more rich – on Tuesday producers’ prices and retail sales will be published, on Wednesday – capital flows and Beige Book, on Thursday – housing, on Friday – consumer inflation. Now markets still believe that after the 1st quarter US economy will start to speed up, but this belief needs confirmations. Forecasts on expected data are quite optimistic, still, as we have already noted, they have rarely coincided with the reality lately. So, it makes sense to focus only on facts. For dollar technical picture is still favorable, there is high probability of renewed local maximums by dollar’s index this week.

    Speaking of local events, this week the Bank of Canada session on monetary policy and British report on unemployment attract attention. In the first case the data on unemployment on the last day of previous week give hints that rates can remain at present levels, and if it will be so, it may provoke strengthening of Canadian currency in the short term. In the second case there are similar preconditions for British pound. Forecasts on unemployment are optimistic, and if they are accurate, then pound will have chance for growth.

     

    Trade tactics:

    Under formed situation in the market, we can’t suggest anything else except to continue keeping short positions in EURUSD pair. The nearest aim is in the range 1.0480 – 1.0510, and these levels don’t look convincing as an unbreakable support. All previous attempts failed. Now we are among euro bears.

     

    Any opinions, advice, news, research, analyses, prices or any other information presented on this webpage is provided as general market commentary and does not constitute investment advice. "Vector Securities" shall not be liable for any loss, including loss of profit, which may arise directly or indirectly from the use of this information.


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