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Expected Euro Correction to 1.0800

On Friday the euro/dollar rate grew to 1.0899 on the back of expectations that the Athens’s question will be resolved by the Eurogroup and their meeting in Riga. After the Eurogroup’s head, Dijsselbloem, announced in a press conference that there are still unresolved disagreements and that whilst Greece is receiving money it should have to undergo a complex program of reform, the euro rate returned to 1.0804. It was clear: Greece won’t receive money in advance.

By the close of the European session the euro rate had returned to 1.0878. The EUR/USD renewed its growth after the release of macro statistics from the US. Despite a significant growth in the US’ Durable Goods Orders index, the indicator (not taking into account the transport sphere) was in the negative. The Eurobulls decided to close their eyes to the problems in Greece.

After massive fluctuations on the euro/dollar rate, it stabilized at 1.0865. The failed negotiations between Greece and its creditors will put pressure on the euro. It’s still unclear how strong this pressure will be since the FOMC will convene only on 29th April.

The dollar bulls are worried about a slowing of the US economy if the US Fed doesn’t raise rates in June. There is one factor which could force the Fed to up the rates in September. J. Yellen has said on multiple occasions that the slowing of economic growth and a reduction in inflation for the most part have been due to the sharp fall in the price of oil.

The cost of Brent oil hit 65.80 dollars for the first time since December last year. Support for oil quotes came from the situation that flared up in Yemen and also the reduction in shale mining in the US. The coalition headed by Saudi Arabia has resumed its airstrikes in Yemen. The number of extraction rigs is continuing to fall. This means that the price of oil should be impacted by the new data on inflation and thereby will increase the likelihood of the rates being increased in summer.

In Asia the euro/dollar fell and is trading at 1.0851. Since today is Monday, I’m forecasting my usual movement against Friday. I expect the euro to fall as part of a correction after a rally to the 67th degree: 1.0800.

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