After long fluctuations, dollar started to grow yesterday. The trigger was American statistics, which didn't disappoint this time. Production activity of NY, industrial production and producers' prices were significantly better than predicted. In general, Janet Yellen’s speech didn't disappoint either – many commentators considered it more optimistically about prospects of economic growth, what increases chances for monetary policy tightening still in this year. Speaking of surprises, we’d like to highlight weak data on unemployment in the U.K., though after Carney’s remark about interest rates on Tuesday, it didn’t stop pound. The Bank of Canada brought the biggest surprise by unexpected decrease of interest rate, what made Canadian dollar the main outsider of the day.
This week the ECB's turn came too. Today it is the main newsmaker. Probably, Mario Draghi will be very careful estimating the situation. In general, the economy of the Eurozone has somehow stabilized, but it is too early to talk about the end of period of weakness. Comments on inflation and program of assets buying-out will be interesting. And regular agreement with Greece looks more like a temporary respite. We already saw something similar a few years ago. Although yesterday Greek parliament approved the agreement with creditors, still, it is in contradiction with outcomes of the referendum, so it remains unclear how political situation will develop in the country under these conditions. So, before the ECB session, euro’s position remains fragile and any careless word is able to send the pair further downward.
Today American events won’t be very impressive. The second day of Janet Yellen’s speech before the Bank Committee is unlikely to bring surprises. Production activity of Philadelphia and weekly applications for unemployment benefits aren’t very significant, though against the background of euro’s weakness, the positive will be very useful. At this moment dollar has some advantage and its growth today will be just natural continuation of previous day.
We suppose that today EURUSD pair will try to break through below 1.0900, still our short-term technical indicators already begin to give signals of euro’s oversold, we fear to open short positions. At levels 1.0860 – 1.0880, opening of long positions with stop at 1.0750 becomes interesting, though risks of game against current trend are still high. Now we can only recommend closing of short positions below 1.0900.
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