Nomura: Shorten the dollar in the summer

Temperatures are rising, and hence the tensions in foreign exchange markets. Japan's largest financial institution, Nomura Holdings Inc., has one offer for currency traders. And it is - to shorten the dollar in the summer.
The financial institution is of the opinion that a short dollar may be a good idea for the next three to four months. The recommendations are to shorten the dollar against the yen and the euro.
Since January, green money has been the strongest base currency, backed by Fed's rising interest rates.
Yesterday, the Fed kept the level of interest unchanged, warning that inflation was almost at the target level. Nonetheless, Nomura is of the opinion that the interest rate increase, which was not implemented yesterday, may begin to slow down.
And in an environment of expectation of ending the incentives from other leading banks around the world, the dollar may begin to decline compared to other major currencies, Nomura said.
Together with rising US inflation, Nomura believes that further interest rates, albeit at a slow pace, will have a very negative impact on the bond market.

Fed kept interest rates unchanged

The Fed kept the interest rate unchanged yesterday, but signaled that the inflation target was reached. Thus, the reserve, though disappointing investors expected an increase in interest rates at this meeting, opened its way to a June increase in interest rates.
The dollar initially declined, but subsequently recovered its losses. The euro returned at trading levels below 1.2000, with the pound continuing with its exceptionally strong impairment. Early this morning, a pound is exchanged for 1.3595 dollars.
The renewal of the Fed's inflation target is a major step after nearly six years in which consumer price growth in the world's largest economy is below the target of 2%.
The Fed also commented on the weak recent data on the labor market, saying labor market activity was slowing down, but it has performed well over the past few months.
In any case, at the next meeting on June 12-13, the Fed is expected to raise interest rates by 25 basis points after not doing so yesterday. Or, the market has bet almost 100%, that we will see a rise next month, unless something really dramatic happens.

The euro area economy remains stable

The economy of the eurozone has kept its strong performance since the beginning of the year, with good performance stimulating companies to recruit new staff at the fastest pace in ten years.
The PMI index for manufacturing and services fell to 55.9 in October, compared to 56.7 in September, according to IHS Markit.
And although the indicator has fallen to the lowest level in two months, the rate of new job in the industrial sector has risen to the highest level since 1997.
Good data comes true shortly before the ECB's meeting this week, which is expected to cut its record-breaking stimulus to the economy.
Currently, the ECB buys back assets worth 60 billion euros, which are expected to be reduced by between 20 and 30 billion dollars from the beginning of next year.
And while inflation is still far below the expectations of the central bank, the first steps towards reducing incentives are expected to be released shortly.

The EUR/USD ended last month with its longest monthly increase since 2013

The euro ended its longest monthly appreciation against the dollar since January 2013, following expectations of rising interest rates in the United States and political uncertainty in Europe.
Market expectations for another US interest rate hike by the end of this year are on the rise, following Janet Yelan's latest comments.
In addition, President Trump's plans for tax cuts seem closer to realization, which causes market players to bet on a strong dollar.
Finally, but not least, the political situation in Germany, as a result of the unconvincing victory of Angela Merkel, can not be ignored.
According to a number of market observers, however, despite all that has been said so far, the prospects for the euro against the dollar are generally positive.
The reason - the expectations Draghi to signal the end of the stimulus program in the euro area at the next ECB meeting in October.
The average expectations of Toronto Dominion Bank analysts are that the euro will end the year at 1.26 dollars.

The euro with a one-month minimum against the dollar

The euro fell below 1.1800 against the dollar, following Yellen's comments on Tuesday and political uncertainty in Germany after the weekend elections.
The single currency is traded at levels around 1.1750, or the lowest in more than a month.
The start of the depreciation for the euro was set by the election results in Germany and Merkel's indecisive victory. According to market observers, it will probably take several months to form a government, a situation that brings uncertainty to the markets.
In addition, in a statement Tuesday, Janet Yellen confirmed the Fed's position for further gradual raise in interest rates. Yellen, however, also said she was not sure about inflation development.
The breakthrough of the key level of support at 1.1810 could also pave the way for further sales of the single currency against the dollar, according to some technical analysts.
Further clarification on the future direction of the single currency is expected to be given by the ECB meeting, which will be held on 26 October. Until then, EUR/USD is likely to be traded in a range.

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.

Draghi appreciated the euro

The euro has appreciated, and US bonds have fallen, as ECB chief Mario Draghi has hinted that inflationary deterrents are temporary. This was accepted by market participants as a serious hint of the forthcoming normalization of the ECB's interest rate policy.
Interest rates on 10-year bonds rose by 3.7 percentage points to 2.175 percent. Bonds on two-year bonds added 2.4 basis points to 1.377%, while 30-year-olds rose by 3.3 basis points to 2.731%.
Draghi said a series of factors delayed the inflationary process, but they are generally temporary and should not cause inflation to deviate from the medium-term.
Market participants, however, read in Draghi's comment a signal for normalizing interest and monetary policy. Monetary incentives in the euro area are scheduled to end in December. It is entirely possible that they will not be prolonged beyond that period.
Interest rates on European government bonds also increased. 10-year German bonds rose by 6.4 basis points to 0.311 percent, while 10-year French bonds rose by 7.7 basis points to 0.684 percent.

The dollar rises after Dudley's comments

The dollar has appreciated against other major currencies, following comments by New York head of state, William Dudley, in support of the future policy of the reserve, on raising interest rates.
Green money rose by about 0.4 percent after Dudley said he was convinced of the economic recovery and strong performance in the labor market, which would eventually trigger inflation. Prior to the expert's statement, trading on the foreign exchange markets was relatively weak.
The statements of the official representatives of the reserve can continue to be at the heart of the investor's interest, as well as that of Stanley Fischer, in Amsterdam.
Dudley's comments come less than a week after the Fed's interest rate hike, when it hinted at another increase by the end of the year.
Meanwhile, some analysts start talking about two more Fed interest rises by the end of the year.
The dollar appreciated against all major currencies, with the highest appreciation against the African rand. To this, the US dollar rose by 1.9%.
The Canadian dollar proved to be the most stable currency against the dollar, to which the US currency appreciated by only 0.1% despite the continuing decline in oil prices.
The election victory of Emmanuel Makron's party has failed to support the euro seriously. The single currency fell to levels of 1.1143 against the dollar.

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.

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.

National Australia Bank reported a loss from euro after four months of waiting

National Australia Bank finally closed short positions in the single currency, opened in November last year, relying on the depreciation of the euro against the dollar below 1.00.

Hopes for a breakthrough at the lower limit of the consolidation pattern did not materialize and the bank closed short positions at the stop at 1.0900 with a loss of 318 points.

Let's remind that in November 2016 the euro dipped below the psychological level of 1.04 against the dollar, reviving hopes of eurobears for parity between the dollar and euro.

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.

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.

The dollar fell to a week minimum

On Friday, the dollar fell against other major currencies to a week minimum. Investors continue to evaluate the minutes of the last FOMC meeting committee.
EUR/USD exchange rate rose by 0.27% to 1.0609, which is the highest since Tuesday.
Posted on Wednesday, January FOMC meeting minutes showed the committee that the Fed leadership is considering an early interest rate increase.
However, the same report indicated the US central bank's uncertainty about the economic program of Trump administration. This reduces the demand for the dollar.
The dollar also came under pressure due to published on Thursday the United States report of the Ministry of Labour in which it is said that last week the number of initial claims for benefits for unemployment in the US increased by 6 thousand to 244 thousand. Analysts expected an increase in the last week of the number of applications for unemployment by 2 thousand to 241 thousand.

The dollar rose to a new wave of optimism

The dollar rose against other major currencies on Friday, recovering from the fall of the previous session to a minimum for the week. Strengthening of course is due to the wave of optimism about the economic situation in the US and more likely interest rate increase in March.
The dollar retains support after a report on Tuesday of Janet Yellen before the US Senate Banking Committee, in which she pointed out that the US central bank will raise the interest rate on one of the following of its meetings.
Yellen said that waiting too long before raising interest rates would be unreasonable under the condition of economic growth and increasing inflation.
In addition, the strengthening of the dollar was due to the positive US statistics on the number of initial applications for unemployment benefits and the number of construction permits.
EUR/USD slipped by 0.22% to 1.0650, down from 1.0682 week high.
The pair GBP/USD fell by 0.52% to 1.2425 after a report in the National Statistical Service of the UK (ONS) said that in January, the volume of retail sales decreased by 0.3% compared with growth forecast for 0,9%.
USD/JPY dipped by 0.43% to 112.75, and USD/CHF rate rose by 0.13% to 0.9984.

Indecisive EUR/USD

EUR/USD fell to 1.0640 yesterday, but then again rose back to 1.07 to the levels of the beginning of the day. This does not change the situation: the trend of growth of the pair is broken. At the same time, the question remains, when will come the impulse to reduce. Surely, bears feel the strength after taking support at 1.0620. Today there aren't scheduled publication of important statistics, so the data is unlikely to be a driver for the dollar. Markets will continue to be ruled by the positioning and reaction to companies statistics.

The dollar lost positions

The dollar has reduced its growth against other major currencies on Friday after the publication of mixed data on US employment.
According to the report of the US Department of Labor the number of employees outside the agricultural sector in January increased by 227 thousand compared with the forecast of 175 thousand. In December, the revised number of people employed outside the agricultural sector amounted to 157 thousand (initial value - 156 thousand).
However, the same report showed that the US unemployment rate in January rose to 4.8% after the value of 4.7% in December. Analysts did not expected an increase in the unemployment rate in January.
The average hourly wage in the United States increased by 0.1% instead of the expected increase of 0.3%.
In recent weeks, the dollar remained under pressure against the background of the protectionist policy of US President Donald Trump and the ban on the entry of immigrants, which led to the general instability in global markets.
EUR/USD has remained stable closing the week at 1.0783, rebounding from a session low 1.0714.
GBP/USD ended lower by 0.30% to 1.2478.

EUR/USD: A rise to 1.0740 is expected

On Monday, the euro trading ended slightly down. Despite falling to the level of 1,0620, eurobulls managed to partially restore the daily losses. The single currency fell against the dollar on the statements of the representative of the ECB Ewald Nowotny. He said that Brexit can lead to significant problems, and that the ECB will not discuss QE decrease until the autumn. The price in the American session returned to the level of 1.0709.
The ECB President Mario Draghi will have a speach today and Europe will publish preliminary data on GDP for the fourth quarter. The speaches of Draghi at the press conference after the ECB meeting usually has a strong influence.
On Tuesday it will begin a two-day meeting of the US Federal Reserve Open Market Committee. It is expected that the regulator will keep rates unchanged. The event is important for the markets, but it is unlikely to have a strong impact.
In this regard, the forecast for Tuesday is for decrease to the area of ​​1.0661 and a rise to 1.0740. According to the technical analysis of the intraday outlook: minimum for the day - 1.0662, maximum - 1.0740, closing - 1.0710.

The dollar fell because of concerns about Trump's protectionist measures

The dollar was held near seven-week lows in Asian trade on Tuesday under pressure from investors' concerns about the possible impact of protectionist position on trade of the US President Donald Trump.
The dollar index by 5.20 GMT increased by 0.1 percent to 100.070 after falling to 99.899 on Monday - the lowest level since Dec. 8.
The dollar against the yen gained 0.1 percent to 112.78, but earlier reached the level of 112.52 - the lowest level since 30 November, much below the maximum of 114.45, reached at night.
Trump on Monday formally brought the United States out of the Trans-Pacific Partnership Agreement (TTP), distancing America from its Asian allies. He also said that he intends to revise the North American Free Trade Agreement (NAFTA).
The negative impact on the dollar has also had a decrease in yields on US bonds. Yield on indicative 10-year Treasury bonds showed a biggest of more than two weeks in a one-day decline, as fears about the consequences of a tough stance of Trump on trade increased demand for safe bonds.
The euro fell by 0.1 percent to $ 1.0753, earlier reaching $1.0774 - the highest value since December 8th.

The dollar is losing ground after the speech of Yellen, investors are waiting for the inauguration of Trump

Dollar lost momentum on Friday as the speech of the Fed's Janet Yellen of the gradual rise of interest rates was less harsh than expected. Investors are watching for the upcoming inauguration of Donald Trump on Friday.
The dollar index fell by 0.10 percent by 5.55 GMT to 101.050 points. The US currency has lost about 0.2 percent for the week.
The dollar moved away from the peak after the speech by the US Federal Reserve chairman Janet Yellen, which came in the early trading in Asia.
Yellen said that US regulators should continue to slowly raise rates to preserve the economy from the low inflation and employment, so as not to damage the economic recovery, the Fed is keen to support.
Now investors expect the inaugural speech of Donald Trump, in which they will be looking for indications of upcoming changes.
The dollar fell against the yen by 0.04 percent to 114.81 yen, heading for weekly increase by 0.2 percent.
The euro gained 0.08 percent to $1.0673, securing growth after the European Central Bank statements. For a week the single European currency has strengthened by 0.3 percent.
The ECB said yesterday that they will continue the policy of negative interest rates and buying up assets to stimulate growth.
The euro briefly fell during a press conference of ECB President Mario Draghi, who spoke about the decaying inflation and the need to further esing in Europe.
The euro fell to $1.0589 during Draghi's speech on Thursday, but later recovered after the words of the head regulator about the absence of policy changes.