14, November 2014

Fundamental analysis

 EUR/USD (a 4-hour chart)

There was the volatility growth within the major pairs yesterday. The pair EUR/USD ended the trading day in the "red zone" amid the empty macroeconomic calendar. The oil quotes reduction contributed to the US dollar rise during the day. The bond market dynamics also supported the dollar demand – on Wednesday we observed the German and the USA yields spread extension.

As we noted in our previous review - the Bank of England negative inflation report will encourage bears to open short positions within the pair GBP/USD. The monetary regulator lowered both the GDP growth and inflation estimation for the next two years. We expect to achieve the 2% target inflation by the end of 2017 that greatly upset the currency market participants. Against this negative background, traders hurried to get rid of pounds that lost 0.85% after the trades.

We observe the steady uptrend within the pair USD/JPY and we do not see any reasons for its failure. The dollar feels quite at ease and bulls use the short-term quotations decrease to increase the "longs". We observed the technical correction in the US and Japan stock markets and against this background the pair dollar/yen quotes fell to the level of 114.88 after that we again saw the US dollar demand yesterday.