28, March 2016

Fundamental analysis

EUR/USD (a 4-hour chart)

Traders continued buying the dollar, still the dollar strengthening was weak and soon after the dollar retreated. In general, traders activity was gradually reduced amid the long Easter weekend (European and the US markets are closed). The dollar positions were undermined by the ambiguous statistics from the United States, although all published reports were quite positive. The United States published the final GDP for the fourth quarter. The data came in at the level 1,4% against the forecasted 1,0%.

German government bonds yields decreased in relation to their counterparts (the US and the UK) which pressured the euro. The pair euro/dollar was trading in a flat.

The 10-year government bonds yield in the UK increased in relation to their counterparts (the United States and Germany), which increased the attractiveness of British assets. Moreover the oil market dynamics was hard to ignore. After a correction caused by weak oil stocks in the US, investors once again began to build up long positions that had a positive impact on the British currency. Only by the end of the trades the pair pound/dollar slightly decreased.

The published inflation data in Japan showed that the consumer price index over the year in February was not changed. Low energy prices and weak demand limited the growth of the price. These facts kept pressuring the Bank of Japan to increase the size of the stimulus, although the regulator had softened its monetary policy in January. The pair dollar/yen slightly increased.