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19 Mar 2015
EUR/USD: Volatility vs demand for greenback
FXStreet (Guatemala) - EUR/USD is currently trading at 1.0630 with a high of 1.0920 and a low of 1.0618.
EUR/USD is back down to test the downside with the failures on 1.10 on the rally yesterday and the incredible squeeze suffered by the bulls. The major is held at 1.0620 support on the correction after a move that started in Asia, and then continued through in European trade and into the US shift, proving how much demand there still in in the market for the greenback. This volatility is likely to consolidate with the demand for the US dollar.
Analysts at The Bank of Tokyo-Mitsubishi UFJ, Ltd noted that the big event for the financial markets – the FOMC meeting – and with the communication change and lower federal funds rate projections now digested by the financial markets, "We anticipate a period of consolidation for the EUR/USD rate. "
Looking ahead for the week, the analyst suggested that perhaps the key economic release will be the inflation data on Tuesday 24th, "Given the lower federal funds projections by the FOMC yesterday were related to cuts to inflation projections," they explained.
We also have a number of Fed officials coming out to speak this week, as noted by the analysts, "Fed Presidents Lockhart and Evans will speak tomorrow – both on monetary and policy and with both voters this year it will be first opportunity to hear views since the new DOT projections were released. Evans is a known dove and Lockhart is more neutral and hence his views may be the more revealing. On Monday, Fed President Williams will speak and coming from the same district (San Francisco) as Yellen, his views will also be important for the markets. We suspect a message consistent with the new forecasts – that is- rate hikes are coming but don’t worry we will be very cautious!"
EUR/USD is back down to test the downside with the failures on 1.10 on the rally yesterday and the incredible squeeze suffered by the bulls. The major is held at 1.0620 support on the correction after a move that started in Asia, and then continued through in European trade and into the US shift, proving how much demand there still in in the market for the greenback. This volatility is likely to consolidate with the demand for the US dollar.
Analysts at The Bank of Tokyo-Mitsubishi UFJ, Ltd noted that the big event for the financial markets – the FOMC meeting – and with the communication change and lower federal funds rate projections now digested by the financial markets, "We anticipate a period of consolidation for the EUR/USD rate. "
Looking ahead for the week, the analyst suggested that perhaps the key economic release will be the inflation data on Tuesday 24th, "Given the lower federal funds projections by the FOMC yesterday were related to cuts to inflation projections," they explained.
We also have a number of Fed officials coming out to speak this week, as noted by the analysts, "Fed Presidents Lockhart and Evans will speak tomorrow – both on monetary and policy and with both voters this year it will be first opportunity to hear views since the new DOT projections were released. Evans is a known dove and Lockhart is more neutral and hence his views may be the more revealing. On Monday, Fed President Williams will speak and coming from the same district (San Francisco) as Yellen, his views will also be important for the markets. We suspect a message consistent with the new forecasts – that is- rate hikes are coming but don’t worry we will be very cautious!"