EUR / USD is looking for an excuse to "rehabilitate"
12.05.2014
This Monday afternoon the main currency pair is attempting recovery, but no compelling reason for this can be seen.
The euro/dollar closed the previous trading week under stress – the “bulls” climbed too high, and ended up falling hard from multi-week peaks. Following the comments of Mario Draghi, head of the European Central Bank, which at the May meeting proved very specific and clear, the investors began to close their short positions in the EUR/USD - which was the whole reason for the fall on Thursday and Friday. Today’s rebound is unlikely to continue - market participants believe that the verbal interventions of Draghi will continue - whether through various comments by the monetary politicians or reshuffling of portfolios, there is no significant difference. What is more important: the market has realized that the ECB does not want an expensive euro.
The European regulator stated this precise reason to activate the main actions in terms of potential summer market stimulation. Expensive currency puts pressure on inflation, which does not seem to find reasons for stabilization. The longer the period of low inflation, the more difficult it will become for the economic system get back on its feet. And although at the moment they are not many deflationary signs, they remain in their original positions.
Nobody can guarantee that the ECB will be confined to verbal interventions and, indeed, will leave everything in its place in June. Everything will depend on the May figures for the consumer price index – it was given the momentum, and now it is up to the natural drivers.
The "bears" in the euro / dollar are still alert and are looking for the sales target of 1.3730.
RoboForex Analytical Department
The euro/dollar closed the previous trading week under stress – the “bulls” climbed too high, and ended up falling hard from multi-week peaks. Following the comments of Mario Draghi, head of the European Central Bank, which at the May meeting proved very specific and clear, the investors began to close their short positions in the EUR/USD - which was the whole reason for the fall on Thursday and Friday. Today’s rebound is unlikely to continue - market participants believe that the verbal interventions of Draghi will continue - whether through various comments by the monetary politicians or reshuffling of portfolios, there is no significant difference. What is more important: the market has realized that the ECB does not want an expensive euro.
The European regulator stated this precise reason to activate the main actions in terms of potential summer market stimulation. Expensive currency puts pressure on inflation, which does not seem to find reasons for stabilization. The longer the period of low inflation, the more difficult it will become for the economic system get back on its feet. And although at the moment they are not many deflationary signs, they remain in their original positions.
Nobody can guarantee that the ECB will be confined to verbal interventions and, indeed, will leave everything in its place in June. Everything will depend on the May figures for the consumer price index – it was given the momentum, and now it is up to the natural drivers.
The "bears" in the euro / dollar are still alert and are looking for the sales target of 1.3730.
RoboForex Analytical Department
Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.