22, March 2016

Fundamental analysis

EUR/USD (a 4-hour chart)

The dollar tried to recover after aggressive sales, still its upward potential was limited, and the US currency was in its third week of decline against the euro. The stock markets sentiment supported the dollar. The main drivers for the risky assets strengthening were: oil growth and Praet's comments (ECB representative) regarding possible further monetary policy.

The EUR/USD showed a mixed background. On the one hand, the growth of "risk appetite" was a negative factor for the euro as a funding currency. On the other hand, moderately negative macroeconomic data from the United States did not allow the dollar to strengthen. Weak Retail Sales for January and February did not allow us to rely on an increase in sales in the secondary market. In fact the data came in at the level of 5,08M against the forecasted 5,34M. However, the pair euro/dollar decreased.

The UK government bonds yield decreased in relation to their counterparts (USA and Germany) which reduced the attractiveness of investments in British assets, and thereby put pressure on the pound. On the other hand, the oil market showed a technical correction as well. Then the oil price showed a growth. The pair pound/dollar closed the trades with a decrease.

Japan celebrated a public holiday, its banks did not work. The market showed low liquidity. The pair dollar/yen slightly increased.