30, March 2016

Fundamental analysis

EUR/USD (a 4-hour chart)

Janet Yellen's speech was the key event yesterday. According to Yellen she is concerned about the low inflation figures. Meanwhile, the Fed has a number of tools for the economy stimulus, if needed, even if the rate returns back to zero. In addition, she noted that the world changes and risks lead to a slower pace of interest rate increase.

The dollar failed to grow against most of its rivals at the beginning of the new trading week. The US currency became a victim of the weak statistics from the US. The market response to the news was extremely intense in a low liquidity due to the ongoing Easter holiday. There was a mixed background concerning the single European currency. On the one hand, the "risk appetite" was preserved, which should put pressure on the euro as a funding currency. On the other hand, after Personal Consumption Expenditures publication the US dollar fell against its major competitors. The US published Consumer Confidence report for March at the level of 96.2 (the previous value was 92.2, the forecast was 93.9). By the end of the trades the pair euro/dollar showed a strong growth.

The growing oil price pushed the pound upwards. The pair pound/dollar increased by the end of the trades.

The yen finished the rally and weakened after the conflicting economic release from Japan. The interest in selling could be associated with the reports about the monetary stimulus measures discussion. The volume of consumer spending in Japan increased by 1.2% in February compared to the last year (it was the first time in six months), which was significantly better than the expected decline of 1.8%. The volume of retail sales grew by only 0.5% with the expected growth of 1.6%. The unemployment rate rose from 3.2% to 3.3%. The pair dollar/yen sharply fell.