The dollar is rising, the metals are collapsing

Contrary to popular beliefs that the dollar is cheaper in times of trade wars, we are seeing the extraordinary strength of the US currency. Earlier this morning, the euro fell to 1.1560 against the dollar and is about to test the critical support at 1.1500. What will happen after this test will most likely depend on the medium-term movement of the single currency.
Otherwise, green money reached a 14-month high against the yuan. China urged a vengeance on Thursday if the US threatens to raise tariffs on exports of Asian-produced goods after US President Donald Trump instructed his trade officials to consider raising customs duties on imported Chinese goods from 10 to 25% of Chinese goods for $200 billion.
But as the US imports much more from China than China from the US, investors see the deployment of the trade war, causing worse trouble for the Chinese economy.
Serious problems due to the appreciation of the dollar have metals. Gold went down this morning near the psychological limit of $1,200 per ounce. Silver is traded at 16.20 dollars per ounce and platinum at $823.

The pound has stabilized after better sales data

The pound continued its appreciation against the euro after better-than-expected retail sales in the UK in July.
The British pound cut off its five-day drop against the single currency after it became clear that retail sales rose by 0.3% on a monthly basis, against an expected 0.2% growth.
The results become a reality day after it became clear that Britain's unemployment rate has fallen to its lowest level since 1975, and salaries has seen higher than expected growth.
The euro fell by 0.2% against the pound to 0.9109 after adding 0.9% over the previous five days to Wednesday.
Meanwhile, the pound has stabilized against the dollar as well, trading at 1.2890 levels after having previously reached the lowest values of 1.2842 or levels unseen since July 12.

The euro falls after ECB meeting

The euro has fallen, along with European indexes since the last ECB meeting. It has been expressed by officials that the euro may be too "hot". US dollar futures fell and the dollar rose.
The index, tracking the performance of the major European companies - the Stoxx Europe 600 Index momentarily changed its direction of decline, but subsequently reverted to a negative territory.
Some market observers think the ECB may postpone its plans to end monetary stimulus and normalize its interest rate policy beyond September.
At this stage, the market predicts that this will happen at the forthcoming meeting in September. It was these expectations, which also triggered the strong growth of the euro against the dollar and other major currencies.

Did the bullish market for the dollar ended?

The US dollar fell sharply against other major currencies in the first half of the year. Investors, however, still have to be careful about declaring the end of the bullish market for green money, some experts say.
US interest rates are still far above those in other developed countries, so many experts recommend investors to prefer bonds outside US in their portfolios.
Consensus forecasts are still for a strong dollar this year, following expectations of further interest rates. And while Janet Yelllen made a step back in her last speech, investors are still expecting a further rise in interest rates this year.
The dollar has risen after Trump's election victory last November, following the expectation that the tax and health reforms planned by the new president will benefit the world's largest economy.
And while healthcare reform is difficult to implement, in the way Trump originally promised, very soon, most likely in August or September, we can expect to see more clarity about tax changes.
The latter may be highly positive for the US dollar and trigger a strong appreciation of the dollar against other major currencies.

The dollar is nearly at two-year low against the euro, following Draghi's comments

The dollar registered its lowest value for two years against the euro on Friday, following Mario Draghi's comments. Draghi said we can see a change in ECB's asset repurchase policy in the autumn.
The dollar index, following the US currency against six major currencies, fell to 94.31 points and was not far from its lowest value since August of 2016 - at a level of 94.09 points. For the week, the index was down by 0.8%.
The euro closed the week at 1.16635.
Draghi announced that there is no specific date scheduled to change the ECB's ultra-stimulus policy on negative interest rates and asset repurchase, but specifies the season when it can happen.
His comments were considered aggressive by market participants, which was also the basis for the appreciation of the single currency.

The ECB kept interest rates, cutting its inflation forecasts

The ECB, as expected, kept the interest rate at 0%. The bank, however, has removed its comments for further interest rate cuts and said it will continue with its bond repurchase program.
In his statement, Draghi said interest rates are expected to remain at their current levels for an extended period of time, but added that he would be ready to extend the buy-back program if needed.
The speculation led to a momentous depreciation of the euro as the single currency declined to 1.1200 against the dollar after it had previously exchanged at 1.1240 levels.
Mario Draghi also said the ECB considers risks to the ECB's economy as "broadly balanced".
That he did by revising the financial institution's downward inflation expectations. The main reason for this is the cheaper oil, which will most likely continue to weigh above the growth in consumer prices.
The ECB is currently expecting an inflation rate of 1.5% this year, 1.3% next year and 1.6% in 2019. This is a decline compared to the March forecast for inflation of 1.7% this year, 1.6% in the next and 1.7% in 2019.

The prospects for the dollar till the end of the year (2)

In addition, it should be noted that tensions between the US and China may begin to increase, not only in connection with potential military conflicts (given the fact that North Korea is entering China's sphere of influence), but also as a consequence of purely economic wars that can be developed, following Trump's policy.
Traditionally, the dollar shows signs of strength when geopolitical tensions grow. The main reserve currency is preferred by the investors as a shelter. Still, if other currencies, such as the Swiss franc and the yen, are not more preferred than the dollar, we still have to see...

The prospects for the dollar till the end of the year (1)

Fed has raised interest rates for the third time since the financial crisis in March, and it is very likely that we will see two new increases in interest rates by the end of the year. If, of course, the US economy, the labor market and inflation are presented as expected. And this will most likely continue to be so...
What, however, has to excite investors in dollars, is if these expectations are set in the price of US dollar relative to other major currencies.
In addition, the Fed has already announced its plans to reduce its record balance, which will be another factor supporting the US currency.
The key to investors will be the evolution of geopolitical events. Deepening tensions between the United States and Russia in connection with the situation in Syria, as well as between the United States and North Korea, and the United States and China, will be other important topics for "green money".

Forex forecast for GBP/USD for April 17 - 21, 2017

According to poll amongst forex analysts and looking at techical picture, the forecast for EUR/USD for the next week looks as follows:
A rebound was expected for the GBP/USD. The basis for such a forecast was a zone of strong medium-term support, near which there was the pair. The goal was the height of 1.2500, which the pair reached in the first half of the week, after which it took a breather for almost a day. And then, having gathered with strength, GBP/USD rose another 75 points higher, reaching a height of 1.2575 on Thursday.
In the medium term, almost 80% of experts expect the pair GBP/USD to fall (support levels are located at 1.2420, 1.2360 and 1.2110). As for the near future, most analysts (60%), supported by both oscillators and trend indicators, are inclined to the fact that the upward impulse has not yet exhausted, and the pair will reach at least the height of 1.2615. The next resistance is at the level of 1.2705.

Forex forecast for EUR/USD for April 17 - 21, 2017

According to poll amongst forex analysts and looking at techical picture, the forecast for EUR/USD for the next week looks as follows:
Both analysts, and technical analysis, based on the oversold pair EUR/USD, last week expected its rebound up, which actually happened. Infact, the strength of the bulls in this case was enough only to raise the pair to a height of 1.0690 (instead of the expected 1.0750), after which it fell to the support zone around 1.0610.
For the next week, most analysts (60%), supported by almost 90% of the indicators, are still on the side of the bears, expecting the pair fall to the 1.0500 zone. The alternative point of view, together with 40% of experts, is presented on the graphical analysis on H4. In their view, the pair is moving in the medium-term upwards channel, which began in December 2016, and it will first rise to the level of 1.0690, and then 130 points higher - to a high of 1.0820.

A hint for Friday's NFP

The US yesterday began to publish reports on the state of the employment market for March. The ADP report on the number of jobs in the private sector has already come out and was pleasantly surprised by its content. Thus, the indicator increased by 263 thousand against the forecast of 187 thousand and the previous indicator of 245 thousand (revised for a decrease from the first estimate of 298 thousand). The components of the ADP report say that employment is most noticeable in enterprises where the number of employees is up to 500 people.

Before the publication of the release, there were doubts that the private sector would repeat the fantastic figures of the previous month. But even with a review of the fall in February data and today's parameters, the picture looks more than optimistic - the business hires employees. This means that medium-sized enterprises and companies are not afraid of tomorrow.

The pound went up against the backdrop of rising activity in the services sector of Great Britain

On Wednesday, the pound rate rose to a maximum for the session after the report data recorded in March the maximum growth in the service sector of the UK for the three months of 2017.
At 08:50 GMT, the pair EUR/USD increased by 0.27% to 1.2473 from the previous value of 1.2435.
Markit reported that the index of business activity in the service sector (PMI) of Great Britain increased last month to 55.0 compared to 53.3 in February. This is the maximum after December 2016.
Economists predicted that the value of this index would be 53.5.
The report says that the rate of price increase has become the maximum for eight and a half years, which indicates a possible increase in inflation this year above 3%, as many economists predict.
The report also indicates that the growth rate of new jobs in the services sector has become minimal over the past seven months.
Together with data from similar studies on the manufacturing and construction sectors that were published this week, the latest report indicated the likelihood of a slowdown in economic growth as the consequences of the UK's withdrawal from the EU.

Eurobulls are exhausted

At the auctions in Asia, the dollar rate was under pressure against its main competitors. The euro/dollar for the third time tested the level of 1.0818. The unsuccessful attempt to consolidate above 1.0820 led to a partial closure of long positions and a price drop to 1.0775. By 14.30 GMT, the euro/dollar currency pair revolves around the level of 1.0790.
The participants of the market, apparently, ended in patience. They can not decide whether to buy currencies against the US dollar or sell. The euro does not become more expensive or cheaper, it consolidates in the range of 43 points between the levels of 1.0775 and 1.0818. Negative impact on the single currency has the yield of 10-year German bonds, which fell by 9.13%, to 0.416% from the opening of the debt market in Europe. The yield on 10-year US bonds fell by 0.90%, to 2.412 and partially offset the negative background.
The overall technical picture on H1 for the euro/dollar pair indicates an increase to 1.0818. For this the pair need to pass the level 1,0800. If at the same time the yield of German bonds will increase, and the American yield will decrease, then there is a probability of climbing above 1.0818. The target for the next two days is 1.0849.

Inflation in the UK passed the limit of 2%

For the first time in three years, consumer prices in the UK recorded a growth of 2.3% yoy, as expectations were for 2.1%. Bank of England repeatedly hinted its willingness to tolerate exceeding goal inflation is limited.

On Tuesday the pound recorded strong growth, while GBP/USD rose by 114 pips, closing at 1.2471. The British pound was also supported with the exact date of activation of Art. 50 of the Treaty of Lisbon.

The euro continued to gain against the greenback and the EUR/USD rose to 1.0806 dollars per euro.

The dollar was subject to sales also against the Japanese yen, as USD/JPY fell over 70 pips, closing at 111,777 yen per dollar. According to Japanese analysts pressure on the greenback was due to falling yields on US bonds.
   
On Tuesday, gold rose by 0.85% at the beginning of the Asian session, the precious metal was subject to sales and reached 1226.91, but subsequently rose and closed at 1244.38 dollars per ounce. The gold price is sensitive to interest rate increases, but rate hikes are not expected in the near future, which explains the bullish sentiment of investors and analysts. Since the increase in interest rates last Wednesday, gold has increased by over 45 dollars per ounce.

The US dollar has almost no chance

The US currency remains under the pressure of sellers, despite the publication of a moderately positive value of the consumer sentiment index from the University of Michigan. Recall that the previous value was at the level of 96.3, the forecast was 97.1, the fact is 97.6. In January and December, this indicator exceeded the 98-point mark. Therefore, I can not say that now we have very good value for it, but I would not consider it a signal for selling the US dollar.
However, at the time of publication of the index, demand for the US dollar declined. Within the first 5 minutes after the release, the US dollar index decreased by 0.1%, moving away from the session high by more than 25 points with the average daily volatility of the US dollar index of 59 points (per month) and 67 points in six months. Accordingly, the risk of further weakening of the US dollar paired with major currencies remains very high.

The B20 Minfin Summit is the next risk factor for the dollar

Sales of US currency slowed on Friday. The markets have practically played the insufficiently tough rhetoric of the US Federal Reserve, having switched attention to the G20 summit at the level of finance ministers.
EUR/USD reached 5-week highs in the region of 1.0780, receiving a fresh impetus to growth on ECB's "hawkish" comments by E.Novotny, who hinted on the possibility of raising the deposit rate before the expiration of the asset buy-back program. Having reached this resistance, the euro attracted a profit-taking and went into negative territory.
Now the main currency pair will wait for signals from the G20 summit. And here, we must admit, there are downward risks for the dollar. Participants in the foreign exchange market fear that Washington will again oppose a strong national currency, in which the Trump administration is not interested right now. In addition, in the draft copy of the G20 there are hints of adherence to the goals of preventing competitive devaluation of currencies.
If these risks are confirmed, on Monday the dollar can expect a new wave of sales against most competitors. In this case, EUR/USD could break above the key area of ​​1.08, spurring growth. And USD/JPY, which is struggling to stay close to 113.00, will lose its psychological support first and go to 112.00.

The dollar is experiencing problems in the formation of growth against the yen

The dollar was supported against the yen last week, ahead of a speech by Federal Reserve Chairman Janet Yellen. But after her speech the dollar again came under pressure.

Overall statements of the President of the Federal Reserve were favorable for the dollar, but it was not enough for the formation of a stable uptrend in the pair USD/JPY. The Japanese currency is highly dependent on the dynamics of yields on US Treasuries. Yellen's speech gave no clear idea how many times this year interest rates will be increased and with what pace. This information was not enough and 10 year bonds rose by above 2.5 percent. Anyway bullish trend in USD/JPY looks extremely hard.

In the area between 114 and 115 yen for dollar there are active sellers. We must not forget that in Japan the new fiscal year begins on April 1. Before that there is support for the Japanese currency.

Dollar declines in anticipation of the promised by Trump incentives

Dollar drops slightly on Tuesday as investors took a wait on the eve of the US president's speech in Congress.
By 11.48 GMT the dollar index slowed down by 0.01 percent to 101.120 against a basket of major currencies after a modest growth in the previous day.
The US currency strengthened after Trump called for a "historic" increase in military spending, which improved appetite of dollar "bulls" before the speech of the American president in Congress.
Dollar Index reached a peak of 14 years shortly after Trump won in the November election against the backdrop of expectations that he will present an ambitious program of fiscal stimulus.
However, the US currency has recently gave up positions, as the administration of Trump has not explained the details of the plans, particularly those regarding tax reform, so the focus has shifted to the President's appearance before the Congress.
Dollar slowed down by 0.15 percent against the yen to 112.50 yen.
The euro gained 0.06 percent against the dollar to $1.0590, moving away from the week peak of $1.0631 reached the previous day.

Dollar: the announcement of the events for February 27 - March 3 (2)

Next week, the focus of the global financial markets will be on the speech of the US president Donald Trump to Congress, which will take place on Tuesday. Market players expect to get more information about tax reform, deregulation of the economy and spending on infrastructure projects.
For the next week are also planned several speeches of the leaders of the Federal Reserve System. The most important will be the speech of the Fed's chairman Janet Yellen on Friday.
In addition, the attention of market players will be attracted by the a revised value of US gross domestic product for the fourth quarter, which will assess the state of the US economy. The UK will publish data on business activity in the private sector, and the focus in the euro area will be inflation data.

Dollar: the announcement of the events for February 27 - March 3 (1)

On Friday, the dollar rose against the basket of other major currencies despite weak sales data for the US homes. Investors expect the US president's speech.
The US Dollar Index, which shows the value of the dollar to a trade-weighted basket of six major currencies, by the end of the trading session rose by 0.17% to 100.12. For the week, it rose by 0.14%.
On Thursday, US Treasury Secretary Steven Mnuchin said that he would like to hold a large-scale tax reform through Congress before the holidays in August, but there is still a lot of work.
According to published on Wednesday minutes of the last FOMC Committee meeting, the Fed's management considers pretty soon to raise interest rates if the economy will develop in line with expectations.
However, the published protocol also listed the Fed's uncertainty about future economic policies of Trump and pointed to the risk of strengthening of the dollar.