02, October 2014

Fundamental analysis

 EUR/USD (a 4-hour chart)

The US dollar ended the trading day with a steady growth against its main competitors - the dollar index basket (USDX) finished the day at 85.95. The EUR/USD was under attack after the euro area inflation release was published. According to the preliminary data, CPI decreased by 0.3% at an annual rate which again points out to the economic deflation. Against this negative background we observed the euro sales, and at the moment the price reached the level of 1.2600 and then traders started partly to take profits closing their "shorts". As the result we saw a technical rebound that was followed by the consolidation.

The GBP/USD will be under pressure during the day amid the UK weak macroeconomic statistics. The negative payments balance has increased sharply in the second quarter confirming the existing problems in the UK economy. Against this background, the bears were able to push the price to 1.6180, but when American market participants appeared we observed a moderate demand for the pound against the US negative consumer confidence macroeconomic statistics. In September the Conference Board index showed a decline to the level of 86 p. It is worth noting that this figure is still above the 12-month average which is positive for the US dollar bulls.

Despite the American and the Japanese stock market correction the USD/JPY is still in demand among traders. It is worth noting that we had strong sales of "black gold" and this factor has traditionally been a positive for the dollar. The Japan macroeconomic statistics continues to disappoint investors. The August industrial production fell by 1.5%, which confirms the export problems. Household expenditures show a significant reduction five months in a row which also negatively affects the economy. In this regard, the traders have no choice if only to buy the US dollar.