05, December 2014

Fundamental analysis

 EUR/USD (a 4-hour chart)

The US dollar bullish trend is slowing down and the dollar index basket (USDX) closed the trades at the mark of 88.94 on Wednesday, setting the new four year high. The EUR/USD bears were able to break through the strong level amid the Germany and the USA yield spreads extension. The ISM index report for the US non-productive sphere pleased traders with the strong data that increased pressure on the single European currency. The index rose up to the level of 59.3 in November that lays a good foundation for a strong economic growth in the fourth quarter. However, the euro sharply rose, and almost recovered this week losses yesterday.

The bulls within the pair GBP/USD received a breath of fresh air after the service sector PMI index release by Markit Economics. In November the index rose up to the level of 58.6 that exceeded the traders’ expectations. The investment banks’ economists from the Wall Street expected the economic growth slowdown in the last quarter of 2014 and this positive report dispels pessimism. It is worth noting that on Wednesday the UK Treasury lowered its growth forecasts for 2016-2018 that will deter bulls from the active attack.

The bullish sentiment on the US and the Japanese stock market supported demand for the pair USD/JPY during the day. The US macroeconomic data showed a mixed background – the ADP and ISM employment releases showed a decrease in comparison with the previous month while the service sector business optimism index exceeded the traders’ expectations. In general, the United States can consider these reports as successful without any doubts. This factor with the Japanese and the US bond yields extension allowed traders to finish the trading day at the high levels since July 2007.