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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.

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