Daily Market Review - 05/13/2014

EUR/USD

The Euro is finally consolidating above 1.3745. It is happening after a long decline since May 8. Thus the aforementioned level might be tested soon, as the trend have high chances of recurring after the end of consolidation.

USD/JPY

The pair is stably growing. At current levels the pair faces resistance. If overcome successfully the trend will continue further up. Otherwise we might see a retracement.

GBP/USD

In the near term the Pound looks bearish. Support is at 1.6836. If the rate rebounds from there, then it might be perceived as a resumption of bullish trend in a longer term.

Market Overview

Draghi still has managed to cause a downfall of the Euro, making a statement last Thursday, that next month the ECB might undertake stimulating measures if inflation is still down. At that he didn’t specify which actions in particular might be undertaken.

Apparently everything will depend on May statistics, which will be available before June meeting.

Meanwhile it is not clear whether it was Draghi’s intention to warn the markets about long expected start of new European QE or at least downgrading of the interest rate. It is worth mentioning that by constant promises to do something the ECB chief puts himself in a quite difficult situation. If in June there are no actions from him, then the Euro might grow even more.

The ECB is almost the only one of the Western CBs not undertaking any stimulating measures. For instance active actions of the Bank of England have allowed British economy to come back to growth with a quite comfortable inflation and unemployment at 5 year minimum.

Of course ruling of the Euro zone is a more complicated process. But it is not a reason to do nothing.

Most likely next meeting the maximum measure will be the downgrade of the key interest rate with supporting statement that the regulator will keep the rates low while inflation is stabilizing.

Economic Calendar

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