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The market moves by inertia


The market moves by inertia
As we supposed, yesterday the dynamics of the exchange market was fully determined by technical factors. Dollar’s index reached new local minimums within the frame of current middle-term trend. Once again, American statistics showed contradictory results – quite good weekly applications for unemployment benefits and weak production prices. The data had practically no influence on trades. In the second half of the day dollar succeeded to regain some of the losses due to clearly defined technical oversold – some of the players preferred to start profit fixation on new minimums of dollar. Herewith the picture hasn’t changed radically – dollar bulls haven’t decided to start attack. 
The final day of the week somehow resembles the previous one – there are practically no drivers. European news background is almost empty, in the U.S.A. the day is richer with events – NY production activity, industrial production, preliminary data on Michigan University Consumer confidence index and capital flows. Forecasts are moderately positive, still, such diversity is a risk factor rather than support. It is difficult to expect sudden sharp rise after series of discouraged and contradictory data. Today there is a high probability that some indicators will be worse than predicted. Against the background of stabilized situation in other regions, the interest to dollar has weakened and there are no reasons for its purchase now. 
 
Trade tactics:
We closed our euro’s long position for 1.1430. Yesterday EURUSD pair slowed down again after it had reached regular maximum. The correction was limited, and there is still the potential for further growth. There are no signals for reversal. At this moment the most preferable tactic is purchase of euro on declines, but not at current levels. However, if upward movement continues without considerable respite, then above 1.1500 short sales with stop at 1.1700 will become interesting. Now we are out of the market. 
 
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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