EUR/USD after the ECB meeting

The ECB meeting is already in the history. In general, it can be summed up that it did not produce anything more serious like news. The euro wondered where it would go against the dollar, but eventually chose to go down, falling below 1.1650. Earlier in the day, the single currency traded at levels of about 1.1700 after the good development from Trump and Juncker meeting.
Overall, the ECB decided to keep its base rate unchanged. Draghi also confirmed that 30 billion stimulus would gradually be reduced to reach zero by December 2018.
At the press conference, Draghi once again confirmed the plans of the financial institution to maintain the current interest rate by the summer of next year to ensure continued steady convergence of inflation over the medium term to levels near two percent.
Of course, the future decisions of ECB will continue to be predetermined by the outgoing macrodata. This was accepted by market participants as a signal that if the trade war resulted in a more serious slowdown in economic growth and inflation, the central bank could be much less aggressive about its interest rates.
In June, the ECB announced its plans to end its massive bond purchase program in December, hinting that interest rates are likely to remain at the current low levels until at least the summer of 2019. The ECB reaffirmed that any possible change to the current plan would depend on the current economic data.
According to technical analysts, the euro may try to retest the psychological limit of 1.1500 against the dollar, and the test will determine the further movement of the currency pair. Decline below this limit can be seen as a very negative signal and lead to further losses for the single currency towards 1.13-1.12. Otherwise, a failed breakthrough, as well as returning at trading levels above 1.1700, will require conditions to boost the euro's appreciation.

Pound is in no hurry to recover

European currencies are making new attempts to recover within the bearish trend, but the momentum remains limited. Euro slightly moved away from the fresh lows of the year under the 1.17 mark, but on approach to the 100-hour moving average consolidated slightly above the opening level.
The pound received a good push to accelerate the bullish pulse, but could not use it fully. Retail sales in Britain were much better than forecasts in April. The indicator in monthly terms jumped 1.6% after a decrease of 1.1% against expectations of a recovery of 0.7%. Sales excluding fuel also recovered, showing an increase of 1.3% after a 0.5% decrease in volumes in March.
GBP/USD tried to grow in response to the release, but just like the euro, it ran into a 100-hour moving average in the 1.3420 area and fell back under the psychological mark. The pair must close above 1.34 to confirm the weakening of short-term pressure.
The reaction of quotations speaks not only of the restraint of buyers in the market, where the dollar continues to trade within the uptrend, but also that the restoration of retail sales did not affect the expectations of players regarding the future policy of the Bank of England. In addition, the April data players regard as obsolete - the response to fresh releases promises to be more lively.
In the short term, the pound is unlikely to develop the momentum of growth and is likely to continue to attract sales on growth attempts. The nearest important resistance is in the area of ​​1.3460.

Inflation in the Eurozone is slowing, the chances of ending the incentives - too

Inflation in the eurozone surprisingly slowed over the past month, according to last week's data, which reduced the chances of a timely exit from the program of incentives and rising interest rates.
Consumer prices rose 1.2% in April, according to Eurostat, which was below their 1.3% growth in the past month. At the same time, the result is sustained under the 2% target of the ECB.
The Core Consumer Price Index slowed down to 0.7%, or its lowest level in a year.
The results were considered very negative by market participants who continued to sell the euro against the dollar. The single currency is permanently traded below 1.2000 and it is extremely difficult for it to return over this treshold again.

The US market once again received support, despite the strengthening of the dollar

The US currency continued its decisive offensive on the global currency market on Wednesday, adding 0.5% on the USDX index. In total, during this mini-rally since April 17, growth has exceeded 2% and sent the dollar to the highs since January. Strengthening is connected with the growth of interest rates, which makes purchases of dollar debt securities more attractive in comparison with analogues from Europe and Japan. In particular, the attractiveness of rates for further weakening of the USD is reduced: the interest for servicing this deal has grown, while the rate has not been able to update the lows.
The EUR/USD failed yesterday in the second half of the day below 1.22, touching on the lows of the 1.216 level, which was not seen from the middle of January. At the same time, US stock markets once again found support on the approach to the 200-day average. As a result, the main indices managed to demonstrate a small strengthening on the basis of the environment, and futures a little more (+ 0.2%) added at the start of trading on Thursday. Thus, the US stock markets can not yet cross the line, which is considered a signal for a serious sell-off.

EUR/USD: technical view for 28/03/18

The pair could not gain a foothold above the level of 1.2425 and again returned to the range 1.2270-1.2425. This behavior is due to the release of weak data on the economy of Germany and the eurozone, which indicate a weakening of economic growth in the region.
The price is located above the middle line of the Bollinger bands, above EMA 5 and EMA 13. RSI is above the level of 50% and slightly increases. Stoch are turned up. MACD is above the zero mark and is decreasing. Indicators do not confirm each other.
If the pair does not rise above the level of 1.2425, it could, on the wave of strong data on US GDP, drop to 1.2350.

Gold is guided by the dollar, but it is bullish

By the last decade of March, the value of gold recovered and returned to the target range of $1,350- $1,400 per troy ounce. On Monday, March 26, the precious metal was trading at $1,346.20 and slightly declining, but observing the behavior of the foreign exchange market, gold has a chance to continue the rising channel.
The main driver for the precious metal is the behavior of the US dollar. If the greenback continues to fall, gold will rush to the highs of last winter to levels $1364- $1365 per troy ounce. If for the greenback there are options to stabilize in the euro/dollar pair, gold will consolidate in a wide range of $1330- $1345. The nearest significant resistance levels are at $1354 and $1360, and support levels at $1,330 and $1305.

Euro's jumping too high

There are risks of excessive euro appreciation, not due to a solid foundation. European regulators are in no hurry to change their stimulus policy.
They are worried about the sudden movements of the euro that do not correspondent to economic grounds. According to market observers, however, the ECB aim at one thing - to put pressure on the euro to fall.
The ECB does not approve of the appreciation of the euro, which makes European goods relatively more expensive on international markets and reduces their competitiveness.
The attempts of ECB heads to put pressure on euro over the past year was meaningless, as the single currency continued to rise, and the market accepted the motto "speaking is cheap."
The ECB faces new uncertainties about inflation expectations and rising oil prices. At the same time, strong economic growth is threatened by the appreciation of the euro.
The euro appreciated by 1.9% against the dollar since the beginning of the year and traded near its highest levels in three years. It fell 0.2% yesterday to levels of 1.2230.

Fluctuating dollar following the announcement of the tax cuts in the US

The dollar appreciated against most currencies on Tuesday, thanks to optimistic data from US building permits, but profits were limited by doubts about the overall impact of the country's main tax revision plan. The Republican Chamber of Deputies approved a large-scale tax bill on Tuesday, then the bill passed through the Senate and was approved. The majority in the US Senate is Republican, and this has made it easier to accept the project.
Green money rose against the yen, and against the euro depreciated after parliament approved the bill.
At the beginning of the session, the dollar appreciated as US housing data reported a 13-month high in November, while data on single-family houses struck a 10-year high. At the end of the session, green money was 0.28% higher against the yen to 112.85 yen. The euro grew slightly against the euro, with the single currency closing the session at 1.18399, which is 0.51% higher than on Monday.

The dollar is the cheapest against the euro since September 25th

The US dollar declined to its lowest level since September 25 against the euro, registering a third consecutive weekly loss.
Concerns that the Fed may not respond to the increased market expectations in terms of the numbers of increases in interest rates have largely determined the depreciation of the US currency.
The US continues to face the dangers of low inflation, even though it operates in full employment.
The dollar index fell 0.39%, reaching the lowest value in two months, at 92.781 points. The index was down 0.9% in the past week.
The euro appreciated by 0.7% at the end of last week, reaching a level of 1.1927 dollars, compared to 1.1850 Thursday. This was the first breach of 1.19 by the end of September. The euro appreciated 1.1% last week.

Draghi: Be careful with the expensive euro

The head of the ECB, Mario Draghi, once again expressed his fears of the appreciation of the euro. Speaking on Monday, Draghi said the recent volatility in the euro exchange rate is a serious source of uncertainty and requires serious monitoring.
The euro rose from 1.05 at the beginning of the year, to about 1.19 dollars, at the moment. Further growth of the single currency against the dollar and other major currencies will seriously burden the "old continent".
Draghi told the European Parliament that the economic situation of the eurozone is stable and broad-based.
Further clarification on the ECB's future policy on incentives and record low interest rates is expected to be given at the next meeting of the Bank's Monetary Policy Committee on 26 October.
It is then that investors expect specific deadlines to end the program of incentives and the gradual normalization of interest rates in the euro area.
At the moment, the ECB buys back bonds worth 60 billion euros per month.
Speculation on ending incentives and normalizing interest rates was largely the basis for the appreciation of the single currency.
However, after the strong rise in the euro, the single currency seems to be in a correction mode, and it is now back below the threshold of 1.1900 on the first day of this week.
Draghi's comments helped further depreciation of the euro, which dropped to about $1.1850.

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.

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

Credit Agricole: The dollar was the victim of unfulfilled hopes

Currency strategists at Credit Agricole recognize the risk of an upward adjustment of EUR/USD in the short term, but expressed doubts about the sustainability of such a movement and its scope.
At the bank believe that the dollar was the victim of the "buy on rumor, sell on facts" and ahead of the FOMC interest rate futures almost guaranteed increase in interest rates and accompanying statement could not warm up expectations for more aggressive tightening policy.
The liquidation of long positions by speculators disappointed in the near future will finish and market participants will remember that the dollar is the third-yield currency of the G10 as maintaining short positions in the currency is not expensive, analysts say.
The situation of the US economy remains highly constructive and Credit Agricole believe that investors underestimate the scale of the rise in interest rates in 2018 and 2019, as suggested by official forecasts of Fed. In addition, exchange rates do not reflect fully the positive for the dollar changes in the differential rate.
Credit Agricole is sticking to its forecast for EUR/USD in the second quarter at 1,04 and 1,05 in the third, hoping that the pair will recover to 1.08 in the fourth and 1.11 in the first quarter of 2018.

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.

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.

Sberbank CIB expects breakthrough of the euro above 1.08

The outcome of the US Federal Reserve on Wednesday was not surprising to anyone. As expected, the interest rate remained at 0.75% and the regulator did not promised increase in the future. The text of the final statement barely changed, analysts say.
The Fed reiterated that it believed that the risks to its economic outlook are roughly balanced and expects a gradual tightening of policy. At the same time the regulator has made it clear that there is improvement in business and consumer sentiment, the analyst added.
For obvious reasons, given the uncertainty about the future policy of the new US President, Federal Reserve prefers to be careful and not to give specific dates for the next increase in interest rates, analysts said.
The probability of such an outcome during the meeting in March is estimated at only 30% and if the Fed wants to tighten its policy in March, it will have to make quite an effort to significantly change expectations and not to shock the markets, analysts say. From CIB still expect two increases in interest rates this year and are waiting for the next increase in the second quarter.