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24 March Forex daily review

Sergiy Zlyvko
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On Monday, dollar index rose to 80.30. Events unfolded in accordance with the basic scenario. But we do not know what happened after the close of the European session. We did not find objective reasons for the fall of the dollar. We do not believe in ripping protective stops and the market reaction to the decision by Fitch to downgrade the outlook on the ratings of 15 Russian banks to “negative”. The fact is that in the evening EURGBP cross-rate rose sharply and yen crosses strengthened. News at this time have not been published.

Since we have not found the cause of euro and Swiss franc growth against the U.S. dollar, in today’s forecast, we do not consider the foundation. The dollar index yesterday fell to 79.75 and then rolled to 79.95. Index has been trading in a narrow range for nine hours. There is a feeling that it was accidental fall. Today the data on Germany and Britain will be published and it will determine the direction of the market on the U.S. session. PMI index for Germany upset the bulls, so today until 9.00 GMT market probably will trade in the range.

On Monday, EURUSD after rising to 1.3825 decreased to 1.3760. On the news it reached the highest and lowest point of the day by the main scenario. Given that yesterday the growth of GBPUSD kept EURGBP cross, today on the background of this cross-rate corrective movement, the euro could come under pressure and return to 1.3815 mark and GBPUSD rebound to 1.6535. The data on inflation will be published in the UK today. It may be the key event for the pound.

At 9.00 GMT three IFO indexes will be published: business climate index, the index of business expectations and current situation assessing index. According to the forecast, we expect slight decrease in performance. At 9.30 GMT in the UK February consumer price index will be published. At this time interval in the foreign exchange market, we should expect sharp price fluctuations. Then volatility should decrease and market participants will switch attention to the American statistics from the U.S. We expect the end of the day near 1.3800 level.

In the U.S. session amid falling U.S. dollar, GBPUSD rebounded to 1.6535, but quickly lost all gained points. Calculated target is reached, but the reason of the increase is not clear.

On Monday, Australian dollar took advantage of euro and pound weaknesses – so the pair closed in the positive zone. In the first half of the day we understand the reason that motivates pair but in the second half of the day there weren’t reasons. Australian dollar reacted yesterday to bad statistics of China, but it quickly regained losses. Today we can’t make the scenario. For other currency pairs in the main scenarios we do not even take fundamental data into account.

Swiss Franc flips the dynamics of EURUSD. All that we wrote about the euro can be used for franc.

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