EUR/USD (a 4-hour chart)
The U.S. dollar grew up during the first day of the week and Japanese data gave little indication that the yen may be a safe haven for currency.
1. Fed signals about narrowing of the leniency program this year. Perhaps in the next month, but it will happen, if the data is not weaken.
2. The Shares have not been able to reach new highs and the recent highs were achieved against the background of falling volumes.
3. Bonds were unable to grow in the U.S. and they are vulnerable to QE.
The current narrow range of EUR / USD is projected to come to an end.
As for the euro / dollar, the picture is equally negative.
There are several important reasons why the euro has held its value against the US dollar for the past 12 months:
• In the euro area, the PMI indices outperformed the United States. They have grown from 45 to 50 and above.
• The trade balance of the euro area was above 1% of GDP last year, while in the U.S. it was lower than -2.6%.
• Balance sheets of central banks showed the greatest difference from 2007. Fed's balance sheet continues to grow strongly (negative for the U.S. dollar), while the ECB has dropped significantly due to the repayment of LTROs (positive for the euro).
In turn, the dollar replied:
• The nearest prospects of curtailing the Fed’s quantitative easing and in the result there was a main demand in the US dollar.