Mario Draghi caused chaos on currency markets

The European Central Bank lowered deposit rates by 10 basis points, from minus 0.3 percent to minus 0.4 percent, a decision which coincided with forecasts of analysts, although some of them predicted even more serious decline to minus 0.5%.

Separately, the monthly volume of the program for purchases of assets was increased from 60 bln 80 bln euro and the range of assets has been expanded to include non-bank corporate bonds denominated in euros. In addition, the ECB will launch a new series of long-term refinancing operations with a maturity of four years.

Minutes after posting the news the euro retreated sharply against the dollar to around 1.0821, but later turned up and closed higher at 1.1217 in highly volatile market. Technically, the price closed the day above the 200 day EMA, suggesting bullish outlook testing the trend line resistance, localized around 1.1300. Short-term expectations are upwards. The nearest support is at 1.1135. A clear break below that area could lead price to neutral trading zone testing 1.1065 support.

The forex market before the highly anticipated ECB meeting

EUR/USD

EUR/USD found support at 1.0800 area. This level coincides with the bottom line of Bollinger. Figures "hammer" and "doji" were formed, they show that the downward trend loses power and goes to a neutral state. The bullish candle from last Thursday shows that it sarts a correction of the downward movement, started from 02.11.2016. The first immediate resistance for the ongoing rise is in the zone of 1.1060. This level from support has become resistance and if the price overcomes it, next resistance level could be expected at the upper line of Bollinger and the previous peak. We must not forget that for a resistance price can serve the round levels of 1. 1100; 1.1200; 1.1300.

If the price has found resistance because it is very close to the level of 1.1060 and a decline starts, we can expect a retest of the bottom of last Thursday.

We expect Thursday full of important news, when there will be a press conference of the ECB and the decision on key interest rates. The main indicator that tracks the ECB is inflation, and it fell to minus 0.20 percent. Therefore, most market participants believe that we will see additional incentives.
It is interesting what they will be, such as extension of the terms and volume of purchase of assets and/or further reducing the deposit rate.

Here we have two options - Mario Draghi may surprise or disappoint market participants. In the first scenario we will witness more robust than expected actions of the ECB. This will lead to a decline in the currency pair.

In the second scenario Draghi will announce anticipated by market participants changes. They may not be deemed sufficient (because they are already calculated in the price), and it will disappoint participants. Last time when Draghi disappointed market participants was on 03/12/2015, and EUR/USD climbed four figures throughout the day.

Both options will lead to increased volatility. This is a prerequisite to be careful on Thursday.

EUR/USD finished the day above the psychological level of 1.1000

The single currency rose against the US Dollar on Monday after the statements of members of the Fed, which added further confusion about the timing of the next rise in interest rates.
The pair traded between 1.0939 and 1.1025, before settling at 1.1013.
The euro rose after Brainard said that the rise in interest rates by the US central bank should be postponed in time, citing that inflation is not expected to reach soon the 2% target.
Also, Stanley Fischer brought additional turmoil as delivered an adverse opinion, expressing hope that inflation rates will continue to increase, as a rise in oil prices should help to achieve the objective of the bank.
The dollar was weaker against most of its rivals during the trading session on Monday.

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USD/JPY: Daily technical forecast for March 7

USD/JPY

The dollar marked a dynamic trading against the yen on Friday. Ultimately opening price is similar to that of the closing, respectively 113.66 and 113.95. In the early hours the bearish sentiment prevailed and so the pair hit bottom for the day at 113.12. Subsequently, the direction changed and so the difference between the highest and lowest value was 113 pips. If the positive momentum continues in the future, currencies will break through resistance at 114.56.

Support: 112.13; 110.95;

Resistance: 114.56; 115.18;

Tsipras: Athens will require immediate displacement of the accumulated migrants

The Greek Prime Minister Alexis Tsipras declared that Athens will require at the EU summit immediate displacement of the accumulated migrants in the country, according to the AP. The prime minister said that he would require sanctions against EU countries that "do not carry out common decisions".
According to Tsipras, the flow of migrants is a consequence of "non-sense and imperialist" interference in the affairs of Middle Eastern countries, which resulted the collapsed state, which used to be in order.

Nordea: Oil prices hit the bottom

Oil prices have reached the bottom, assume analysts from Nordea Bank. According to their forecast, in the fourth quarter of 2016 Brent will cost about $50 per barrel, and for the full 2015 average price is $41 per barrel, reported Bloomberg. Quotations of the May futures for Brent crude on London's ICE Futures exchange increased by $1.1 (2.97%) - up to $38.17 per barrel.
Contract prices for WTI for April in electronic trading on the New York Stock Exchange (NYMEX) at this time increased by $0.95 (2.75%) - up to $35.52 per barrel.
Meanwile, Azerbaijan supported the initiative of Russia and a number of OPEC members to freeze oil production in 2016.

BTMU: USD/JPY aiming to Y115

The pair USD/JPY remained in a range in recent days as investors are uncertain about the future actions of the Bank of Japan and Federal Reserve, note forex strategists of BTMU.

The rate of the Japanese currency against the dollar is unlikely to affect especially from the meeting of the European Central Bank, scheduled for March 10, although the event may cause movements in EUR/JPY.

However, if the regulators on the continent take aggressive incentives that would reinforce expectations of their colleagues from the Land of the Rising Sun to follow suit. By BTMU does not believe that BoJ would vote changes of the monetary policy this month.

In the short term, USD/JPY will likely test the area of ​​Y115.00, provide analysts, but do not expect a move higher as the possible growth would be limited by offers made by Japanese exporters.

Deutsche Bank: When poverty reduces, the dollar climbs

Forex strategists of Deutsche Bank remain among the most prominent bears in terms of EUR/USD, and support expectations for a rate of $0.95 at the end of the year with a new argument.

When poverty decreases, the dollar rises, emphasize analysts and point out, that the index of poverty (The misery index), which measures inflation and unemployment declined to nearly 60-year low in November.

At the same time, expectations are, that today's monthly government report on the labor market in the US reveal, that unemployment remained at 4.9 percent, in the eight-year lows.

"The misery index suggests optimism." - Commented director of currency analysis at Deutsche Bank Alan Ruskin. - "The more positive situation on the labor market in the US, the more likely the Fed to continue tightening monetary policy which would support demand for dollars."

Daily technical forecasts for March 4

EUR/USD

The single currency recorded a significant increase against the US dollar on Thursday. The session started at 1.0867 and then the price went down, reaching the lowest level for the day at 1.0853. Later the pair reversed direction and ultimately the euro closed at a rate of 1.0956. Recently reached levels confirm the positive attitudes that will probably leave the bulls in a leading position.

Support: 1.0810; 1.0730;

Resistance: 1.0975; 1.1100; 1.1286;

GBP/USD

Yesterday the British pound recorded significant increase against the US dollar. After a volatile session, the pair added 97 pips at a closing price of 1.4173. Price managed to break through levels at 1.4100 and went up. If the bullish trend continues, most likely will test the first resistance at 1.4360.

Support: 1.4100; 1.3709; 1.3568;

Resistance: 1.4360; 1.4592;

USD/JPY

The pair recorded a modest increase. The session started at a price of 113.45 and after diverse trading throughout the day eventually finished at a price of 113.66. The graphics continue to evolve over moving averages, while the index of relative strength remained on neutral territory. Continuing bullish dominance test will result in levels of 114.00.

Support: 110.000;

Resistance: 114.00; 116.00; 117.19;