31, July 2014

EUR/USD Fundamental analysis

EUR/USD (a 4-hour chart)

The market has already shown the directed activity and the U.S. dollar strengthened on all fronts. Apparently, investors "bought the rumor" expecting the U.S. economy good forecasts. The labor report prophecy affects the pair supporting the dollar growth interest. The data presented yesterday changed the U.S. currency optimism and noted the different trends direction. The Fed's decision announcement will become the final event which will decide the monetary policy future. The imminent tightening hints add acceleration to the dollar growth as its absence may trigger the stop and reducing correction.

The IMF believes that if the UK inflation grows actively, the new BoE regulations on real estate market won't be effective to prevent the "bubble" formation and the Bank of England will have to tighten the monetary policy sooner than was predicted. The British economy analysis annual report from the IMF found the current BoE ultra soft policy acceptable, but it should be possible to correct it quickly in case of inflation acceleration. The IMF believes that the "cooling" of the housing market interest rate increase is necessary.

During the Asian session, there were received much Japanese macroeconomic data which showed the unemployment rate within 3.7% compared with the predicted 3.5% and the region retail sales 0.4% compared with the expected 0.8%. This fact pressured the Japanese currency and lifted the dollar.