Daily Market Review - 09/17/2014

EUR/USD

The Euro is going up quite well relying on up slanting support line. Resistance on the upside forms an ascending triangle, what is a bullish pattern. Nevertheless inability to rise past resistance will push the rate back.

USD/JPY

Most likely the asset has exhausted its momentum, and the boundary on the upside won’t be crossed. We can already see slight down slanting inclination, so the bias is bearish.

GBP/USD

The rebound of the Pound continues quite well. At the moment the goals on the upside are 1.6400 and 16500. The outlook continues to be bullish in the near term.

Market Overview

Statistical data from the Euro zone still suggest the possibility of recession recurrence. According to ZEW economic sentiment index dropped to the minimum of December 2012. More over: the forecast of dynamics of Italian GDP this year was revised from +0.2% to -0.4%. At that there are no positive changes expected any time soon, especially if Brussels can defend the necessity of further spending reduction.

The ECB has been waiting with stimulating measures launch for so long, that in conditions of exacerbating recession there are questions about their effectiveness. At that different vector of monetary policy of the ECB and the FRS has already lead to significant downgrade of the EURUSD, which has been expected by Europe exporters. At that accusations of the ECB in starting currency war are not heard.

The thing is that in case of deflation in Europe, there is a significant probability of Japanese scenario recurrence, but in a bigger scope. Nobody is interested in such events development, and we do not hear any comments from the FRS. Moreover there is another meeting of the FOMC planned for today, where there might be other hints at soon approaching rate raise, what is likely to give Euro bears new powers.

The ECB constantly suggest that the rates are not the goal of the regulator’s policy. But earlier Draghi had mentioned that abrupt growth of the main currency form the mid 2012 decreased inflation by only 7% comparing to March maximums, what according to French CB is insufficient.

Depreciating Euro has already lead to growth of import prices, what is supposed to positively reflect on pace of inflation growth. But for any more or less significant results further easing of the Euro is necessary. At absence of global contradictions between regulators on that issue a continuation of gradual decline of the Euro could be expected, at least until risks of deflation in Europe are not that significant.

Economic Calendar

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