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Euro Sideways Drift Could Stretch Until Thursday

Eurozone inflation and unemployment data enabled a euro recovery against the dollar to the 1.1240 level on Monday. Unemployment is down, whilst inflation in February ended up higher than forecasted.

In New York, euro/dollar trading returned to the 1.1176 level, whilst the pound/dollar rate slumped to a weekly minimum. The ISM business activity index from Markit Economics offered support to the dollar by rising from 54.3 to 55.1.

In Asia the euro/dollar pair is trading at 1.1190. The Reserve Bank of Australia kept its interest rate at 2.25%. The AUD/USD rate reacted with a sharp growth by 65 points since the market expected the rate to be reduced by 0.25%. I made the forecast for Tuesday before the publishing of this decision, so I’m not going to change it. Here I’d like to say that the AUD/USD rate could be a hazard for the eurobears. Due to this, the flat could stretch until Thursday (the ECB is meeting and Draghi will hold a press conference).

Today we’ll know about the retail sales values in Germany for January. A fall in the monthly indicator with a growth in the yearly indicator is expected. At 12:00 EET a report for January values of manufacturing inflation in the Eurozone is due to come out.

In the UK at 11:30 EET the business activity index in the construction sector is due to come out and at 12:00 EET there is a planned speech from the Bank of England’s governor, Mark Carney. From 11:30 to 12:30 EET you can expect high volatility on the market. A decisive role for both the pound and the euro will be played by the euro/pound cross. If the euro/dollar and the pound/dollar will set on a southerly path (downwards), then the AUD/USD’s growth won’t threaten them. I’m waiting for a euro reduction to 1.1153 by the end of the European session.

03 March, 07:47 (GMT+3)
Pound: Expect a Fall to 1.15332

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Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial markets. Alpari bears no responsibility whatsoever for any possible losses (or other forms of damage), whether direct or indirect, which may occur in case of using material published in the review.

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