Eur/usd - page 240
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EURUSD had a high volatile session yesterday with a 467 pips range after Fed's monetary policy statement. The Dovish tone coming out from the Fed’s statement triggered a short squeeze pushing the pair to 1.1034 so today should be a digestion day, meaning that the price should stay inside the previous day range.
EUR/USD: Dollar Corrects Fed-Induced Heavy Losses
The US dollar corrected heavy losses from the previous session, after the euro bounced from 12-year lows.
The euro jumped nearly 500 pips during a single session, back above $1.10. The spike was short-lived but the euro remains trading near the $1.08 area, well above last week's low, it's lowest since 2003, $1.0461 seen on Friday.
The dollar managed to recover somewhat during the overnight session and added firm gains versus the euro. EUR/USD was seen 1.38% lower to $1.0711 during the European morning session.
Standing up to expectations, the FOMC outcome was the highlight of this week, with the removal of the ‘patience’ reference, which many would have expected to result in a stronger greenback. However, what made the difference was a substantial downgrade to interest rate forecasts in the dot plot analysis.
"The dots showed the median projection for the Fed funds target range is now at 0.63% (down from 1.13%) for the end of 2015 and now stands at 1.88% (down from 2.38%) for the end of 2016. For the end of 2017 it was lowered to 3.13% (from 3.63%)," Stan Shamu from IG wrote in a research note on Thursday.
The Fed statement further said that an "increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting."
Moreover, the governors lowered the 2015 inflation outlook and hinted that they are not fully confident in the return to the 2% target for consumer prices.
"It will be appropriate to raise the target range for the federal funds rate when... it is reasonably confident that inflation will move back to its 2 percent objective over the medium term," the statement read in part.
"This will leave many wondering whether the US dollar weakness we saw yesterday will be a prolonged move. The simple answer lies in the data and if we can see US data track above expectations, then the greenback is likely to adjust accordingly. On the euro side of the equation nothing has really changed for now and once the short covering gets out of the way, traders will be looking to reassess their position on the pair," Shamu added.
EUR/USD: Dollar Gets Recovery Injection After FOMC Sell-Off
The dollar advanced over 2% against the euro on Thursday, after the Federal Reserve's (Fed) monetary policy statement revised projections for the federal fund rates, which saw the dollar register its biggest daily slump since 2000.
The greenback pocketed 2.20% against the euro on Thursday, trading up at $1.0622, with traders buying the dollar after it lost nearly 4% in the last session.
The greenback shed nearly 500 pips during a single session, falling back above $1.10. The reaction, however, was short-lived and the dollar is seeing a decent recovery on Thursday, still standing far off last week's 12-year high at $1.0461.
However, a further correction to the downside for the dollar is expected, according to HSBC bank, which revised up the EUR/USD forecast to $1.10 by the end of 2016 from $1.05 previously, while also expecting it to move up to $1.20 in 2017.
"In a dovish statement and press conference, the FOMC, as expected, dropped its reference to ‘patient’ but implied greater slack in the economy than earlier envisioned," ANZ Research team said in a note on Thursday.
"The meeting emphasized the Fed’s data dependence and put the focus on its economic projections, which were dovish and sparked a reversal of positions," said Masato Yanagiya, head of foreign exchange and money trading at Sumitomo Mitsui Banking Corp. in New York.
Adding to the sharp sell-off was a substantial downgrade to interest rate forecasts in the dot plot analysis. "The dots showed the median projection for the Fed funds target range is now at 0.63% (down from 1.13%) for the end of 2015 and now stands at 1.88% (down from 2.38%) for the end of 2016. For the end of 2017 it was lowered to 3.13% (from 3.63%)," Stan Shamu from IG wrote in a research note on Thursday.
Moreover, the Fed lowered the 2015 inflation outlook and hinted that they are not fully confident in the return to the 2% target for consumer prices.
"It will be appropriate to raise the target range for the federal funds rate when... it is reasonably confident that inflation will move back to its 2 percent objective over the medium term," the statement read in part.
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do news really matter !!!! i dont think so
do news really matter !!!! i dont think so
What happened yesterday? I thought so
Factory Prices in Germany Move Upward: Feb PPI
Annual producer prices in the euro area's number one economy remained in negative territory for a 19th consecutive month in February, according to the latest report from the Federal Statistical Office (Destatis). However, on a monthly basis, the gauge showed an uptick, suggesting that the trend may be changing.
The headline annual Producer Price Index (PPI) in Germany declined 2.1% in the reported month, but less than the decrease of 2.2% posted in the previous month. Market consensus had bet on a 2.0% drop.
On a monthly basis, however, the gauge edged 0.1% higher in February, while it had fallen 0.6% in the preceding month. Analysts had predicted a 0.2% increase.
The index measures the average change in the price of goods and services sold by manufacturers and producers in the wholesale market during a given period.
Consumer prices
Consumer price growth in Europe's powerhouse swung back to positive territory in February after touching deflation in January, official data showed last week.
Inflation in the euro zone’s largest economy sped up 0.1% year-on-year during the second month of the year, following the 0.4% downturn seen in January when the gauge turned negative for the first time in over five years. On a monthly basis, the consumer price index (CPI) swung back into the green, as it accelerated 0.9%.
In recent months, falling energy prices have been the major factor behind the weakness in consumer prices.
EURUSD initially rose but found enough selling pressure at 50% of Fibonacci retracement to reverse and close near the low of the day in a typical digestion day. The pair should consolidate from 1.08 to 1.05 levels until Tuesday of next week.
EUR/USD: Euro Soars on Short Covering, FOMC Dovishness
The euro soared on Friday as the pair failed to move to new technical lows after the sell-off from $1.10 on Wednesday, stopping above $1.06 as traders sold the dollar on the renewed prospects of Federal Reserve (Fed) dovishness.
The EUR/USD pair rose around 200 pips on Friday, with heavy bids appearing as the US session started. Investors are repricing the FOMC statement, which failed to provide any more information about the future rate hikes, instead, governors downgraded their inflation and growth forecasts.
Moreover, "The dots showed the median projection for the Fed funds target range is now at 0.63% (down from 1.13%) for the end of 2015 and now stands at 1.88% (down from 2.38%) for the end of 2016. For the end of 2017 it was lowered to 3.13% (from 3.63%)," Stan Shamu from IG wrote in a research note on Thursday.
The currency pair was trading above the $1.08 handle during the US session on Friday, with an intraday gain reaching more than 1%. Short covering was obvious and the next stop of this very volatile move should be Wednesday's high at $1.10.
Moreover, negotiations between Greece and the EU might finally bring some positive results and the shared currency should be boosted by this. The euro is very oversold and any breakthrough should call for short covering and a possible rally.
Earlier on Thursday, the ECB announced that the latest 3rd TLTRO takeup was €97.8, beating estimates of €40 billion, but the amount borrowed was still lower than €129.8 billion in the second tranche.
Technical analysis
The euro has completely erased gains, the whole spike from Wednesday and what looked, at first, like the beginning of a correction formation was just a massive short squeeze.
The EUR/USD short term picture on intraday charts found resistance, and bounced profit taking players slightly above the big round number of $1.10.
It is very possible that many longs from $1.07 and $1.08 are now underwater, and are holding losses which could eventually lead to a false breakout on the other side, below the support of $1.06, where many of these positions have placed stop losses.
source
thanks for the news
EUR/USD Forecast March 23, 2015
The EUR/USD pair broke higher during the course of the session on Friday, closing above the 1.08 level. It looks like we are heading back to the 1.10 level given enough time, but we also recognize that this is a market that is essentially stuck in a consolidative area. We are more than willing to sell this market on signs of resistance near the 1.10 level, or any type of resistive candle between here and there. We have no interest in buying the Euro there are far too many reasons to avoid it.