IAFT Weekly Economic Review

Published last week statistical data for the Eurozone in general were mixed. Data on the balance of the current account of the Eurozone have exceeded analysts' forecasts, but the February production in the construction sector has not reached the predicted values and the previous value was revised downward. However, macroeconomic statistics was of secondary importance for the participants of the currency market, because their attention was focused on the forthcoming meeting of the European Central Bank and the press conference of Mario Draghi.

In anticipation of these events in the euro against US dollar traded mixed, rising to first resistance in the area of 1.1380, and after the pair back to the testing 1.1283 the support. As analysts predicted, the ECB did not make any changes to the current monetary policy, leaving interest rate and the volume of asset purchases unchanged, and in his comments, the president of the bank has confirmed the absence of intent to continue lowering of rate, so the first reaction of the euro became its growth. However, caution of the president of the ECB about the possible exit of of Great Britain from the European Union has returned the sellers, and the pair completed the week down to 1.1220.

Thus, the ability of euro/dollar to continue the growth was in serious doubt, and break through at least a week will lead to a reduction to 1.1144-1.1059. Doubtful now looks and the ability of the Japanese yen to continue the growth, since at the end of the week, the dollar/yen broke through the resistance at the 110-th figure and rose to the level of 111.80. This was facilitated by rumors about of possible introduction by the Bank of Japan of negative deposit rate, which have provoked a fairly large-scale profit fixation on long positions in the yen. Prior to the announcement of the results of the meeting of the Japanese Central Bank, which will be held later this week, the pressure on it will remain, and further dynamics of the pair may depend on the results themselves, and that should be considered by the IAFT traders. BlogLinks

Best regards, AffiLinks

International Association of Forex Traders