IAFT Weekly Economic Review

Published last week, macroeconomic statistics for the UK was quite weak, but the British pound, however, enjoyed a certain demand. As we have repeatedly warned, its overselling increases the risk of upward correction, which has been observed on the second week. As a result of the recovery, in the pound against the dollar by the end of last week has tested resistance at 1.4436, but weekly closure was below the 44th figure. In the short term, a drop below the psychological level of 1.4000 seems unlikely, but the chances of the UK leaving the EU, will continue to put pressure on the pound.

In turn, the very rapid growth of the Japanese yen on the background of the flight of investors from the "risky" assets led to its overbought, in tandem with the US dollar, as well as in cross-rates with other currencies. As a result, the dollar/ yen continued its consolidation in a range between support at 112.20 and resistance of 114.50. Stock indexes may still resume the decline that will support the yen, but this week will be held the meeting of the Bank of Japan and the Federal Committee on the US FRS open market, the results of which can significantly affect the dynamics of dollar/yen.

The most volatile currency of the last week turned to be the euro. The European Central Bank at the last meeting adopted a decision to lower interest rate on deposits and loans, as well as to increase by 20 billion. of euros the amount of monthly asset purchases. The scale of the introduced stimulus measures have exceeded expectations of market participants, which led to a sharp fall of of euros. However, the words of Mario Draghi that he sees no need for further lowering of rates, provoked a demand for the euro, against which he hit a number of important levels, it rose against the dollar up to 1.1218. Having consolidated above the brokenthrough highs, the euro could move higher in the direction of the 14th figure, but on the background of the differential of the monetary policies of the ECB and the FRS we can continue to talk about the risks of resumption of downtrend, that should be considered by the IAFT traders.BlogLinks

Best regards, AffiLinks

International Association of Forex Traders