Vector Securities - Analytics

    Vector Securities

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    Correction or a new trend – that is the question

    On the last day of the week most currencies were mainly in consolidation. Some respite was necessary after recent impetuous growth against dollar. Besides, German producers’ prices continued falling, what made the most popular pair of the market stall. Actually, the situation was quite interesting. Reevaluation of prospects of monetary policy tightening by the Fed lowered interest to dollar and its sales. Meanwhile, the situation hasn’t changed globally – the Fed is still in the phase of monetary policy tightening and such regulators as the ECB and the Bank of England announce new stimulation measures. After some period of emotional reaction to last actions of regulators, this fact will be on the agenda again. Then economic news will  be on front pages of informational messages again. If US economic indicators will go downward, then the Fed will have to correct its expectations again. In this case renewed stimulation of US economy is possible, then it will become a reason for change of trend in the exchange market. If it doesn’t happen and economic indicators continue to grow and even at moderate pace, then current change of moods will be just a short-term correction.
    This week will be short – on Friday there is a holiday – Good Friday in countries, which are mainly Catholic, so most markets won’t work. We presume that due to this fact the week will be calm. Still, during this week there will be several interesting reports. In the U.S.A. there will be the data on housing market, durable goods orders and final data on GDP for the 4th quarter. Now the market is under impression of decisions of main regulators, it will be difficult for dollar bulls to return the initiative. Even positive statistics from the U.S.A. will provide only short-term support to dollar. Actually, quick look at forecasts shows that they are quite good. Expectations for slowdown of sales in the secondary housing market and durable goods orders are based on active growth during last months rather than on current situation, so they can be deceived. For euro’s fans Tuesday will become the main challenge as preliminary data on PMI business activity for March and IFO and ZEW reports will be published. If forecasts are met, and they are generally positive, then it will allow euro to retain current mood and they will become the base for further growth in the range 1.1400 – 1.1500 at least.
    Trade tactics:
    On Friday EURUSD pair rolled back from maximums and has consolidated below 1.1300. As before, we expect testing of the range 1.1370 – 1.1380 in the short term, so we continue keeping our long position in euro. There are some risks that the position can be closed on stop. Still, taking into account that stop is set at the break-even point, we are aware of this risk and take it. 
    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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