13, October 2014

Fundamental analysis

EUR/USD (a 4-hour chart)

There is an uncertainty sentiment in the currency market - the US dollar has significantly strengthened against its major competitors in the recent months and the technical correction is long overdue, however, the dollar bears’ first attempt was unsuccessful. The Fed gave hope to the bears last week but the “black gold” quotations decrease supported the American currency later. It should be noted that the oil sales have a negative impact on the whole world's leading economy, as inflation is now below the level of 2% and the oil bearish trend will have a significant pressure on the CPI.

Against this backdrop, investors think which currency will be the most affected due to the low inflation expectations. In this regard, we have observed the US dollar demand - traders left the commodity market and transferred their assets in cash, namely in the US dollar.

The initial jobless claims release which came out better than the forecasted medians has also raised the dollar bulls’ sentiment. Four-week initial jobless claims average set a fresh yearly low at around 287.75K which indicates the American labor market positive trends.