21, October 2014

Fundamental analysis

 EUR/USD (a 4-hour chart)

The US dollar was able to strengthen significantly its position against its main competitors the last week - the dollar index basket (USDX) closed at around 85.20. The pair EUR/USD was moderately decreasing during the day amid the US positive macroeconomic data. The consumer sentiment index by the University of Michigan established multi-year highs in October that dispels our skepticism about the US economic prospects. Traders tried to start a technical correction for the euro/dollar, but so far their efforts were unsuccessful. As soon as we see an increase above the 28th figure – bears immediately come to the market and the euro once again returns to the range of 1.2605 -1.2805.

The pair GBP/USD enjoyed moderate demand during the day amid the short positions’ closing. The US and UK 10-year bond yields declined significantly to a level of 0.7 bp that in turn is a bullish signal for the pound sterling. We observed a technical rebound amid the US positive data about the consumer confidence by the Institute of Michigan. Then at the moment the pound quotes reached the level of 1.6180.

The pair USD/JPY strengthened significantly amid the global equity markets demand. After considerable sales on the American stock market – the bullish sentiment increased. The US positive data by Institute of Michigan supported the dollar. The consumer sentiment index showed a record growth to the level of 86.4 in October that confirms the US economic strength against its main competitors.