The dollar with the fifth consecutive daily decline

The dollar fell on the first full day of the new year 2018. The US dollar index hit its fifth consecutive day-to-day drop, reaching nearly a three-month minimum. Traders are trying to predict what the Fed's interest rate policy will be in the new year.
Given that they sent the dollar down, investors are clearly not convinced that we will see three US interest rates hikes this year. Such an opinion can certainly be said to be the bond markets as well.
The dollar index lost 0.3 percent to 91.836 points or its lowest value since September. The index lost 9.9% of its value in the past year, experiencing its worst year since 2003.
The euro rose to 1.2060, versus 1,2006 late on Monday. Thus, the single currency is traded at levels unseen since September last year.

UBS: The dollar is heading for a difficult 2018

The US currency will most likely be disappointing next year against the euro, despite the expected continued interest rate hike by the Fed, according to experts from UBS.
The Fed is expected to raise the interest rate three times in the following year. Traditionally an increase in interest is assumed to be good for the US currency, so the forecast is a bit surprising.
Since the beginning of the year, the euro has risen by 11.5% against the dollar.
The financial institution's strategists believe that, fundamentally, the euro remains cheap and a better performance of European economies should channel a further appreciation of the single currency.
The bank expects the dollar to perform well against the Canadian dollar and the Japanese yen next year. The outlook for inflation in Canada remains weak, so the recent appreciation of the Canadian currency may have exhausted its strength.
Strengthening the power of the current Japanese Prime Minister will most likely trigger a further policy of incentives and low interest rates by the central bank. So, the weakness of the Japanese currency is likely to continue with full force, according to UBS.

Draghi worried about the power of the euro?

The head of the ECB, Mario Draghi, is worried about the strength of the single currency against the dollar and other major currencies. Since the beginning of the year, the euro has risen by 12% against the dollar.
Thus, Draghi expressed same fears, repeatedly given by the previous ECB chief, Jean-Claude Trichet, that the strong euro could seriously hurt growth prospects for the eurozone economy.
In addition, the strong European currency puts a pole in the wheel of inflation. And inflation is one of the main threats to the growth of the eurozone economy.

EUR/USD may fall to 1.04, and GBP/USD - to 1.20

The euro has risen to levels close to the psychological limit of 1.1500, but not all experts are convinced of further growth for the single currency.
The US dollar seems ready to shake off losses after Donald Trump's election victory, according to Amherst Pierpont.
The weak dollar may be ready to make a "U-turn" now that there are confirmations of interest rates rise.
Since the beginning of the year, the dollar has fallen by 8% against the euro and by 13% against the Mexican peso.
Analysts say, however, investors are starting to look beyond Washington for support for green money. The US currency should follow interest rates on government bonds that have risen.
In addition, the Fed is expected to begin to reduce its balance sheet, which in itself will cause a further rise in short-term interest rates and, accordingly, should make the dollar more expensive.
According to Amherst Pierpont's strategists, from now on we will see a return to the dollar-positive environment. They expect the dollar to rise by between 3 and 4% in general, the euro to move to 1.04 against the dollar and the pound to 1.20.

The dollar is cheaper after the Fed's minutes

The dollar dropped after the Fed meeting of the previous session yesterday.
It makes it clear that the members of the Monetary Policy Committee have agreed to refrain from more aggressive interest-rate action until it becomes clear that the observed slowdown in the US economy has been a temporary phenomenon.
Analysts believe the Fed's statements confirm the thesis of most market participants that we will probably see no more than two interest rises this year.
The euro appreciated against the dollar and traded at levels of 1.1236 early this morning. Later, the single currency reached the highest values ​​of about 1.1250.
The pound also rose against the dollar, again trying to get back above the psychological limit of 1.3000 against the dollar.

The dollar continued to fall in price against the backdrop of political instability in the US

On Friday, the dollar continued to depreciate against other major currencies, having updated at least six months, due to the fact that political instability in the US continues to exert powerful pressure on the US currency.
EUR / USD rose by 0.84% ​​to a new high in six months, 1.1196.
However, the dollar remained under massive pressure after this week's publications, from which it follows that US President Donald Trump asked the former director of the FBI, James Komi, to suspend the investigation into the relations with Russia by National Security Adviser Michael Flynn.
On Wednesday, the US Department of Justice appointed Robert Mueller as a special adviser who would monitor the investigation of Russia's alleged interference in the US presidential election campaign in 2016.

Euro/dollar in the near future will still close the gap

The euro/dollar is falling and is trading near the 1.088 mark. Following the meeting, the ECB left the interest rate unchanged at zero level. The decision of the bank was expected, therefore the market reaction is indirect. However, the growth of volatility is still possible, in the evening there will be a press conference of the bank, whose rhetoric will be closely evaluated. I assume that in the near future the pair will close the gap. Also in the evening there will be statistics from the US: orders for durable goods, unemployment data and unfinished sales in the real estate market.

EUR/GBP - time to sell

Traders who traded the GBP were greatly surprised when British Prime Minister Teresa May announced that early elections will be held in the United Kingdom on June 8th. For some time, the Conservative Party has overriding the opposition, according to polls, so the prospect of them remaining in power continues to be up to date, and such a development of events will not have a particular weight on the markets. In the short term, additional information is needed to keep the pound rally.
EUR/USD also rose, on a par with the British currency, in part due to a weakening dollar.
In terms of technical analysis, in the currency pair, there is a breakthrough in the key support for a reversing "head and shoulders" figure, which has been developing for 9 months. We can look for short positions at the current price, putting a stop at 0.8460 and a target 0.7886.

JPMorgan is waiting for a sharp rise in euro

The volatility of the European currency jumped to its highest level since the referendum on the withdrawal of Britain from the EU structure (Brexit), analysts say.
Investors are now facing the danger of a populist victory in the presidential election in France, they add.
Nomura analysts comment that significant cash flows are aimed at hedging currency risk, and most likely this will affect the euro and increase trading volumes on election days.
The French presidential elections will take place in two rounds: on April 23 and May 7. Polls indicate that voters in the second round are likely to vote for National Front party leader Marin Le Pen, who stands for leaving the country out of the Eurozone.
However, the newspaper notes that investors are concerned about fluctuations in the results of opinion polls.
According to JPMorgan analysts, Le Pen's win will be well accepted by market participants. So, the growth of the euro against the dollar to 1.15 dollars per euro is not excluded, compared to the current levels of about 1.07 dollars per euro, experts say.

Deutsche Bank: The defeat of Marine Le Pen could send EUR/USD to 1.08

In case of victory of Emmanuel Macron on the presidential elections in France (the first round is on April 23, and the second - on May 7), EUR/USD could rise to 1.08 dollars, the bank analysts said. Furthermore, they believe that:
- Low volatility talk about market confidence in the fact that Le Pen would win;
- despite recent bellicose statements of the administration of Donald Trump on currency manipulators, neither the US nor China want excessive weakening of the yuan;
- breakthrough of US 10-year bonds below 2.25% could spark a new wave of liquidation of short positions;
- in general, the yield on US bonds look quite low relative to the general economic picture and it seems the market underestimated the warlike attitude of the Federal Reserve.

ABN Amro: ECB will start to reduce incentives in January

While the sources of the ECB signaled that the market has taken a sharp change in the rhetoric of central bank, ABN Amro analysts do not change their view of readiness in the near future the process of reducing the stimulus measures to begin.
Furthermore, ABN Amro adjusted its forecast and now the baseline scenario assumes the end of the program for purchases of assets.
Strategists believe that in January 2018 the ECB will start to decrease the monthly volume of purchases by 10 euro billion per month, resulting in quantitative easing program will be completed by June, then the ECB will start to normalize interest rates on deposits.
At ABN Amro believe that the first step in this direction will be held in September next year. ABN Amro still retains its forecast for EUR/USD, made in early March:
    Q2 2017 - 1.05
    Q3 2017 - 1.05
    Q4 2017 - 1.10
    1Q 2018 - 1.15
    2018 - 1.20

Dollar up

On Thursday, the dollar gained in price against the basket of other major currencies against the background of the weakening of the euro.
The US dollar index, which shows the strength of the dollar relative to a basket weighted by trade from the six leading currencies, increased by 0.21% to 100.00.
On Monday, amid the failure of Donald Trump's bill on medical reform, the dollar index fell to 98.67, the lowest level in four and a half months.
The withdrawal of the bill increased fears in Trump's ability to realize his economic policy, including tax cuts and increased spending on infrastructure projects.
The EUR/USD slipped by 0.27% to 1,0784, retreating from the high of 1.0905, fixed on Monday, for four and a half months.
The euro fell as a result of yesterday's trading session after Reuters reported that officials of the ECB are wary of making any changes to the statement on monetary policy in April. The fact is that the previous ECB statement as a result of the March 9 meeting was misinterpreted by the markets.
In a previous statement, ECB officials recognized the improvement in the eurozone economy, which led to increased expectations about a reduction in the financial incentive program and a possible increase in the interest rate.
President of the Federal Reserve Bank of Chicago, Charles Evans, said on Wednesday that he supports a further increase in the interest rate this year. This increased demand for the dollar.
The dollar slightly changed against the yen: USD/JPY was at the level of 111.03, recouping further from the minimum of four weeks 110.10, reached on Monday.

The pound declined after the Brexit start

The pound fell against the dollar, after on Wednesday the British Prime Minister Teresa Mei formally launched the procedure for Britain's divorse with the European Union and began a two-year period of negotiations on the terms of Brexit, which will end in late March 2019. The pair GBP/USD fell by 0.12% to 1.2418. At the same time, the pound went up against the euro: the pair EUR/GBP fell by 0.14% to 0.8644.
On Wednesday the British Prime Minister Teresa May signed a letter that will officially launch Brexit. A letter with an official notification of Britain's invoke the 50th article of the Lisbon Treaty with the aim of exit from the European Union was delivered to the chairman of the European Council Donald Tusk.

Barclays is waiting for recovery of the euro against the franc

Currency strategists at Barclays note that investor sentiment towards the euro in recent times have changed for the better and believe that sustainable economic recovery will strengthen the market, which is of the opinion that the ECB is close enough to start removing stimulus measures, analysts said.
In the bank believe that correction of forecasts of the European central bank may give investors reason to expect an increase in deposit interest rates next year.
In addition, in the coming months, support for the single European currency can eliminate the risk premium associated with the uncertainty of the elections in France, analysts say.
At Barclays noted that such a prospect gives cause for moderate optimism in EUR/CHF - in the are bank waiting for the pair in the second quarter to come back to 1.09 and will continue to recover moderately (to 1.10 and 1.11 respectively) in the third and fourth quarters.

BofA-ML: market positioning of dollar suggests neither growth nor decline in prices

The current market positioning of the dollar seems neutral. In addition, positions opened before and after the presidential elections in the US, were closed.
A new impetus for the growth of the US currency may give the fiscal policy of the United States (survey results show high expectations that the tax reform will be carried out this year). Market positioning suggests neither an increase nor a decrease in the dollar.
A strengthening of the volatility of the euro is quite possible. According to participants in the trade, some investors are betting on growth in the single currency and the current positioning of it is more bullish than a year ago.
Analysts believe that the weakness of the euro in the first half of the year will change because of its strengthening against the possible desire of the ECB to begin to alleviate its program for quantitative easing. Generally they say that investor sentiment for the single currency is more bullish than positions on the market.

Goldman Sachs: Investors have become more favorable for the euro

Currency strategists at Goldman Sachs have identified a change in the behavior of market participants amid recent signals and raising forecasts by the ECB and a warning that in the absence of deterioration in the nature of incoming data in the coming weeks, the rhetoric of central bank may become more confident.
At Goldman Sachs believe that the ECB is too optimistic in their forecasts for economic growth and inflation, there is potential for further adjustment of ECB policy.
Bank analysts believe that the recovery of the euro will be felt in the crosses (Fed factor is eliminated) and retain their quarterly forecast for EUR/GBP at 0.90 level and at the level of 127 for EUR/JPY.

Westpac recommends to sell the euro

EUR/USD remains under pressure and is currently trading at 1.0672. Westpac analysts note that while the pair remains within range in the short-term, it is likely its lower limit to be breached. On the one hand the market is absolutely confident in raising interest rates at the Fed meeting on March 15 and there is a risk that the US currency will be hostage to the popular strategy of "buy on rumor, sell on facts", the reaction of the dollar will depend on the nature of the accompanying statements. However, the results of the meeting of the ECB, which was held last week and some improvement data from the Eurozone in recent years has raised concerns about a possible tightening of the positions of the central bank, analysts said.
In Westpac however, believe that the lethargy in core inflation and the lack of a clear trend towards improvement will warrant the ECB to change its position, while maintaining political risk as a deterrent. This may prompt the leadership of the central bank to reaffirm its commitment to a flexible policy.
The dynamics of EUR/USD shows the prevailing bearish sentiment and evidence of the inevitable the ECB's position against the background of structural statistics from the US, which could "unleash" the hands of the sellers, analysts say. In Westpac recommend selling of EUR/USD with the expectation of a decline to 1.04 area. Bank stays true to its forecast of 1.03 this quarter, followed by  1.01.

Deutsche Bank: Short positions in EUR/CHF have become more attractive

The fundamentals remain constructive for the Swiss currency, in addition to these, analysts believe that increased political risks in Europe that are negative for the euro and positive for francs and which maintain the status of the franc as a safe haven currency.
At Deutsche Bank noted that the inflow of foreign capital continues to urge the franc to rise, as 1.06 level seems to have become the new unofficial border of the Swiss National Bank, as bank analysts do not talk about defense of this level at any cost.
At Deutsche Bank advised attempts to growth of EUR/CHF to be used for sales of еuro, expecting to break below 1.06 and the fall of the exchange rate at 1.00. Analysts note that the data show favorable for such a deal positioning of market participants.

Natixis is awaiting fall of the pound to 1.18 in the coming months

Natixis publish its weekly review of the currencies of the G-10, draws attention to the fact that uncertainty about Brekzit will likely have a negative impact on economic growth in the UK, which will keep sterling under selling pressure.

Although GDP growth in the UK remains stable, uncertainty about the upcoming negotiations with the European Union is still very high, especially considering the rise of euroscepticism and the coincidence in time with the negotiation of a number of key elections.

For these reasons, analysts of the bank are cautious about prospects for economic growth in the UK in the medium term, recognizing the risk of stagflation. In the near time should be monitored CPI (looking to rise by 1.9% in January) and employment data. The bank remained wary of the pound, predicting a decline in GBP/USD towards 1.18 over the coming months. They expect EUR/GBP to vary between 0.84 and 0.86 in the near future.

Westpac advise to sell the euro at the moment

Westpac currency strategists still believe that any attempt of the euro to rise above 1.0600 area provides a good opportunity to sell. The euro has risen in January from around 1.04 to the top near 1.0830, it is supported by a narrowing of spreads in bond yields, strong data in the Eurozone and negative news from the US as well as the weakening of expectations of increasing inflation due the new policy of Trump, analysts say.

Since then, spreads on two-year bonds in the eurozone and the US have recovered almost all the losses in January, promising new lows for the euro, they added. However, EUR/USD pair fell by only 50% of the rally from the lows in January.

The chances of an increase in interest rates by the Federal Reserve rose to 45 percent in March, but they must remain at least at current levels, then need to be increased during the presentation of Trump before both houses of Congress, analysts say.

At the same time on the side of the euro are financial flows in defensive assets that can further reduce yields on German bonds, at least until the upcoming elections in the Netherlands (March 15), then in France (second round on 07 May). Bank analysts expect a continuation of the downward movement.