16, October 2014

Fundamental analysis

EUR/USD (a 4-hour chart)

The US dollar was able to regain some lost ground - the dollar index basket (USDX) finished the trading day at around 85.84. The pair EUR/USD is not still able to determine the direction. If it was not for the Fed's statement, the dollar revaluation would be able to prevent inflationary pressure - the bears were able to set the fresh lows. The bulls were able to overclock quotes to the mark of 1.2767 in the Asian session amid the US and German 10-year bonds spread decline. But after the weak release by the ZEW Institute, we observed the price decrease. The oil market sales only intensify deflationary expectations and, in this regard, we saw a fresh one-year low on the German 10-year bond yields.

The pair GBP/USD fell strongly - the trade ended by 1.13% quotes decline. CPI showed a 1.2% year- on- year decline in September which indicates the lower inflationary pressure. Against this background, the UK monetary regulator will not hurry to raise interest rates that is a negative factor for the currency. Traders were trying to get rid of the British pound the whole day that led to the massive pound sell-offs along the entire market.

Stock markets showed a positive trend the whole day which supported the moderate US dollar demand amid the lack of interesting US and Japan macroeconomic releases.