High volatility in the markets will continue in the foreseeable future

The European economy against the backdrop of strong post-crisis economic growth continues to demonstrate a slowdown in inflationary pressures, as well as a noticeable decline in business activity, consumer and business confidence.
Published Tuesday data on the import price index in Germany indicate that after a fairly significant surge last year, and then the same decline in the current rate continued to fall and, according to the information provided, for the first time since November 2016 moved to negative territory.
It was assumed that the price index for imports in Germany in annual terms will fall in February by 0.3% against the increase of the previous year by 0.7%, but it fell by 0.6%. The monthly value of the indicator also showed negative dynamics in February, having decreased by 0.6% with a 0.3% decline forecast and a 0.6% increase in January.
As for the British pound, it is also possible to speak about its probable local decline, if the arrangements for the UK's exit from the European Union slow down. While the expectation of an early resolution of Brexit supports an undervalued pound, and still high inflation stimulates hopes that the Bank of England will raise interest rates already at the May meeting.
In general, observing the world markets and for the currency one in particular, we can state the fact that uncertainty remains, which does not allow investors to concentrate and trade both for raising and lowering. We continue to believe that high volatility in the markets will continue.

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.

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.

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.

ANZ: The bearish attitudes to the dollar are overexposed

The US dollar received a serious "slap" this year, with the dollar index down by 9% since the beginning of the year. Not all analysts, however, are so negative towards the dollar.
The political uncertainty surrounding the Trump administration is cited by ANZ analysts as the main reason for the "excessive depreciation of the dollar" over other major currencies.
Leverage funds currently have a net short position in the dollar, which has taken the levels of "green money" far beyond the foundation, analysts said.
The weakness of the underlying reserve currency became a reality, despite the rise in Fed's interest rates, which outstripped other central banks around the world. In addition, the Fed's balance sheet is expected to start shrinking relatively soon, which will be another factor that will work to support the US dollar.

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 with the worst quarter for years

The president Donald Trump goes firmly to his goal - the US dollar has finished its worst quarter for years.
According to Trump, any weakness of the dollar is a major goal of his administration. The president's logic is that the weak US currency will stimulate companies and, accordingly, the country's economy.
Green money rose to a peak of 14 years in December, but since then it has become cheaper as a result of expectations for measures by the new administration.
In the second quarter, the dollar index, measuring the performance of the US currency against other major currencies, fell by 4.6%. This was its worst quarter since the third quarter of 2010.
The disappointing data on the US economy, coupled with good European data, helped to guide the dollar in the direction desired by Trump.
In addition, central banks around the world have expressed the view that it is time to change the course of their current stimulus policies. Including in Europe. This gave an extra boost to the euro.
The only weak link, at this stage, remains Japan. There the incentives are expected to last longer than in the rest of the world.

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.

Wells Fargo: Short-term weakness of USD/JPY

Wells Fargo Securities chief strategist Erick Viloria predicts further weakness of the dollar against the yen in the short term in an interview with Bloomberg.
The reason for these expectations is the political uncertainty in Europe and other parts of the world that can make investors look for the yen as a safe haven.
The head of the Japanese central bank said on Thursday that the institution will continue its accumulation policy until the inflation targets are met. This is happening in an environment of rising interest rates from the Fed, which makes the situation favorable to the dollar against the yen.
Nevertheless, Viloria points to the previous few interest raises, in which market participants "bought on rumors and sold on news". That is to say, that the difference in the policies of the two central banks - the US and the Japanese - is already calculated in USD/JPY trading levels.

UOB remains in short positions in dollars

Forex strategists at the UOB Group believe that in the coming weeks, the probability for testing the level of $108.00 on dollar/yen will fall.
While the bank's analysts say that 108.00 is very strong support and is unlikely to pass the level so easily, the strong rally over 108.11 was unexpected. The upward movement has the potential to expand, but the pace of each recovery is expected to be slower, analysts said. Therefore, strong resistance above 109.30 will not be a surprise, with the next resistance at 109.80 being unlikely to be tested in the coming days.
The bank's stops at their short positions are at 109.30, as the move above this level will not be a surprise, the bank said. According to analysts, the probability of a new test is increased to 108.00 or lower. Otherwise, the chances of a downward break will continue to decline, experts write.

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.

USD/JPY continues to fall

If the EUR/USD pair after the publication of an interview with Trump is growing, but remains within the usual dianpazon, in USD/JPY the discontent of the President from the strong national currency and sympathy to the policy of low interest rates leads to a decline to new lows, say analysts.
With the start of the Asian session on Thursday the pair has not undergone significant changes, as there were offers for purchase at 108.80 and the balance of risks remains in favor of a reduction to 107.86 (61.8% of the growth from 11/11/2016).

JP Morgan: We must be careful with the pound as the bulls remain in control of the situation

The break of support around 1.2430/20 last week has a negative impact on the dynamics of the British currency, and now the pair found support near 1.2360, as analysts of JP Morgan advised to be careful.
In the bank warned that a break below 1.2316/00 will signal the return of the couple to a model of consolidation and the support moves to 1.2229 then the focus will be on 1.1988.
So far, the banking scenario is consolidation of the pair in the short term and new test of the resistance above 1.2631. The ability of the pound to overcome the last resistance is a sign of support for the Bulls, who hope for formation of bottom, as a way opens to test 1.2839 and then 1.3187.

TD Securities prefers to stay in the camp of bulls for the dollar

Asked whether the glass is half empty or half full, and whether the current consolidation of USD/JPY has paused, strategists at TD Securities adhere to the camp of optimists.
In the bank noted that the pair remains above the important support near 110 and it is expected that the statistics from the US this week will support bulls in US currency, especially if the yield on ten-year government bonds remain above 2.3%.
In TD Securities connect strengthening of the yen in recent times with the activities of hedgers and repatriation of capital by Japanese investors and expect that the started a new financial year in Japan will lead to a negative character for the Japanese currency.
At the same time the positive signals from economic reports are expected to contribute to increased overall risk appetite, as their weakening last week also affect the yen.
In TD Securities advised to use attempts to reduce the USD/JPY to 110 for tactical purchases with expectations for growth to 113.50, as the bank adhere to forecast for second-quarter level of 114, but expect a return to 112 and 110 over the next two quarters.

Commerzbank maintains a bearish view on pounds

Commerzbank analysts believe that the short term outlook for the pound remains negative.
Last week, the pound failed to close above the short term resistance at 1.2579/81 (maximum of February 9), the negative forecast of analysts remains.
The pound is still not closed below 55- and 100-day moving average, but analysts believe that it will happen this week. Elliott waves are positive, but the market is facing 1.2640 and 1.2660. Below 1.2347 (minimum of February), attention will focus on the recent minimum of 1.2110. It is considered the last defense of 1.1988 - bottom-January.
Key short-term resistance is at 1.2640. Only break above 1.2707 most of February will enable expect further strengthening to the maximum since December - 1.2777. Between this level and 1.2836 lie several Fibonacci corrections and greater resistance and analysts suspect that the bulls will not go further.

The dollar was volatile against the yen after the US attacks on the Syrian airbase and NFP

The dollar fell in price against the Japanese yen on Friday morning after the US fired cruise missiles, striking at the airbase in Syria and provoking concern about the sharp escalation of the Syrian conflict.
President of the United States Donald Trump on Thursday said that he ordered to launch missile strikes on the Syrian airbase, with which a lethal chemical attack was carried out.
The dollar index to the basket of six major rival currencies by 6 am GMT fell by 0.08 percent to 100.59.
Against the yen, which traditionally grows during geopolitical tensions and risk aversion, the dollar sank by 0.3 percent to 110.45 yen.
However, after positive NFP dollar managed to climb to daily highs at 111.37.

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