16, September 2014

Fundamental analysis

EUR/USD (a 4-hour chart)

The American dollar has been growing for nine weeks, showing the longest rise in the last 17 years, due to the Federal Reserve interest rates changing in 2015 while the other major central banks have a more easy monetary policy.

Even taking into account the fact that the last week the dollar did not show the strongest growth, it still was at the top the last three months. We can see the American currency growth potential, especially if this week the Fed surprises the market by the policy tightening. The dollar is supported by the United States positive economic data and the ECB's decision to cut the interest rates.

The United States growth is higher than in the other most developed countries. In addition, the Fed is going to raise the rates, while the ECB and the Bank of Japan are still going to continue easing. Now more and more market participants expect the Fed interest rates rising in June 2015 and not in September as it was previously predicted.

The ECB is expected to continue to take the necessary measures to hold the low interest rates for the long term which ultimately lead to a higher inflation. Against this background, a large and a long-term the euro downtrend is predicted towards the dollar parity.

The EUR/USD grown a few as the market attitude to the euro improving result amid the industrial production data in the euro zone that have exceeded expectations. But the uptrend is limited by the European Central Bank super easy policy. The pair is consolidating.