Fundamental analytics

To start your day - EUR / USD

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EUR / USD is gradually recovering after FOMC decision to raise the rate by 25 bpts was made. What is more important that the intention was announced to increase rates in the second half of the year from one to two. The Fed statements were more hawkish then expected, as comments were accompanied by positive assessments of US economy, the forecast for unemployment was lowered and the inflation forecast was raised.

At the last meeting, 8 out of 15 participants in the meeting advocated a rate-hike. As a rule, such decisions lead to the strengthening of the US currency and, accordingly, to EUR / USD decline, but now we see the reverse reaction of the market, given the Fed's plans to increase rates of rate increase in 2018.

However, there are a number of ideas, which can explain such reaction of the market. Yesterday we stated that upcoming ECB meeting is much more meaningful for the market. Recent news or rather rumors on QE ceasing surprised many people on the background of economic and internal political problems in the EU, few expected hawkish rhetoric of the European regulator. After that, the European currency began to recover, and these positive expectations are now helping the currency pair successfully resist the decision of the Federal Reserve to speed up the process of normalizing monetary policy.

The decision and comments of the ECB will be decisive for the EUR / USD currency pair, as investors are likely to assess the further prospects of the currency pair knowing exactly the results of the meetings of both regulators, which will provide a full picture of further actions of the Fed and the ECB.

Today all the attention should be paid to the results of the ECB meeting and especially to the comments of Mario Draghi, which will become the determining factor and will probably give impetus to the development of a new trend movement on the market. If the head of ECB announces the soon curtailment of the QE program, the European currency may gain against USD dollar. If the decision on the stimulus program for the economy is announced or hinted, the EUR / USD pair will be under very strong pressure, as the markets will immediately implement the results of FOMC meeting.

In addition, data on retail sales in the US will also be published today, but most likely the traders will ignore them, concentrating on the decision on the ECB's future policy.

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