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Fundamental Trends:
While global economies continue to steadily recover from economic recession, the growth momentum across countries is becoming more diverse. US are in transitionary phase between accommodative and contractionary monetary policies. FOMC, finishing QE last week, is thoroughly monitoring economic activity for any signs of weaknesses. The first increase in the interest rates is expected in May-June, assuming the economy will expand as predicted. UK as US, experience a gradual improvement in economy, though the asset purchase program is still not finished. EU is struggling at improving the economic activity. The real GDP growth was zero in the second quarter, the inflation is channelling near zero as well. Employment grew only by 0.2%. ECB in addition to LTRO and TLTRO announced further reduction in policy rates and implementation of asset purchase program with the main aim to revive the consumer spending and inventory investing, through credit lending.
The fundamental background puts downward pressure on EUR/USD in the medium and long term. However, this fundamental information is more or less reflected in the EUR/USD rate. Moreover, taken into account a large number of CFTC leveraged short positions and dealer long positions, it can be assumed that EUR/USD is near consolidation point, assuming no new significant information is announced. Thus, technically I will look for entering long positions. MACD, ADX, DMI h4 are my indicators of this week.
Risks: unexpected new fundamental information, e.g. ECB meeting on Thursday.
While global economies continue to steadily recover from economic recession, the growth momentum across countries is becoming more diverse. US are in transitionary phase between accommodative and contractionary monetary policies. FOMC, finishing QE last week, is thoroughly monitoring economic activity for any signs of weaknesses. The first increase in the interest rates is expected in May-June, assuming the economy will expand as predicted. UK as US, experience a gradual improvement in economy, though the asset purchase program is still not finished. EU is struggling at improving the economic activity. The real GDP growth was zero in the second quarter, the inflation is channelling near zero as well. Employment grew only by 0.2%. ECB in addition to LTRO and TLTRO announced further reduction in policy rates and implementation of asset purchase program with the main aim to revive the consumer spending and inventory investing, through credit lending.
The fundamental background puts downward pressure on EUR/USD in the medium and long term. However, this fundamental information is more or less reflected in the EUR/USD rate. Moreover, taken into account a large number of CFTC leveraged short positions and dealer long positions, it can be assumed that EUR/USD is near consolidation point, assuming no new significant information is announced. Thus, technically I will look for entering long positions. MACD, ADX, DMI h4 are my indicators of this week.
Risks: unexpected new fundamental information, e.g. ECB meeting on Thursday.
