Daily Market Review - 04/11/2014

EUR/USD

As had been expected in the previous forecasts after some correction the upward movement has resumed and the rate managed to rise past the resistance level at 1.3807. Now we see another short term correction. So the bias remains bullish.

USD/JPY

The rebound from 101.55 has encountered resistance at 102.13. The asset was unable to overcome it. So now the downward pressure is pushing the currency down to the aforementioned support. If it doesn’t hold the prior bearish trend will continue.

GBP/USD

In accordance with expectations the consolidation has ended and the Pound is up again. So from now on the 1.6755 level acts as support. The outlook for the pair is bullish.

Market Overview

In spite of the fact that Draghi recently has been threatening with monetary weapon, the market seems to have no more hopes in possibility of launch of any stimulating programs in Europe. The comment of the member of execution committee about absence of deflation risks has also contributed to market sentiment. If there are no risks then the possibility of emission launch is minuscule. It was quite logical conclusion of Euro “bulls”.

When inflation in Europe dropped to 0.7%, the ECB decreased the rate. Accordingly now people expect something of the kind, the variant with keeping of the status quo was regarded as the least probable. After the meeting of the regulator Euro has been declining for a while mainly because of new portion of Draghi’s promises. Though last claims of the ECB officials and strong data on German industry and consumer demand suggested diminishing probability of European QE launch.

Let’s assume that April inflation will show an insignificant acceleration constituting 0.6 – 0.7%. From the ECB we are likely to hear talks about stabilizing of the situation, supported by next claim, that the regulator is still ready to oppose deflation, risk of which nobody sees now. No one pays attention to a lot of states which are close to that deflation.

At that if not the IMF report where the necessity of further easing of the ECB policy mentioned, the pair would be trading higher. Growing rates of the Euro are not good for exporters, whom the recovery relies on, because only Germany at the moment could show positive dynamics of GDP relying on inner demand.

Economic Calendar

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