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31 March Forex daily review

Sergiy Zlyvko
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On Monday after the release of consumer inflation in the Eurozone, the dollar index DXY rose to 80.30 mark and at the same hour dropped to 80.05. In the U.S. session, DXY index decreased to 79.95 level and according to last data it traded at 80.10 points.

At 13.45 GMT PMI Managers Association Index was published in Chicago. Index was at 55.9 compared with a forecast of 59 and the previous value of 59.8. After 10 minutes, the performance of Janet Yellen began. She said that even though unemployment rate in the U.S. fell, the economy will require additional support for some time. On Friday NFP report will remain important for the currency market.

DXY index is at 80.15. Manufacturing PMI index of business activity in the countries of the EU should be the driver for sharp price fluctuations. The data will be released in the interval from 7.15 GMT to 8.00 GMT. At 7.55 GMT German unemployment rate for March will be released. At 8.30 GMT goes PMI in the UK will be published.

In the case of significant deviations from actual values on the forward, the market is expected to surge in volatility. Because dollar index yesterday fell to 79.95, then in the first half of the day it would be expected to decrease to 79.90. We do not see the fall below 79.90, because EURUSD and GBPUSD closed slightly a month. As for EURUSD forecast, in the first half of the day the growth to 1.3820 mark is scheduled. Bulls’ success will depend on European statistics.

Actual movement came about like a basic scenario, but we’re more concerned about the emerging model, which blows the euro after the ECB meeting and how the market will react to the NFP.

On the monthly chart a triangle forms, and EURUSD strayed from the resistance line. Monthly candle is more like a dodge with a long upper shadow, than a shooting star. This is a signal to suspend growth of EURUSD, but not reversal. In order to go into a deep correction, bears have to consolidate below 1.3705, then the road to 1.3470 level will be opened. CCI indicator on the monthly chart crossed downwards 100. This is serious signal to long positions’ closing. We consider today to rise to 1.3820 mark and return to 1.3780. We did not heed the news.

On Monday afternoon, GBPUSD came under pressure after the release of the inflation report for the Eurozone and the growth of EURGBP cross-rate. When the cross changed direction, GBPUSD rose to 1.6685 level. Yesterday GBPUSD dropped to 1.6610, but the breaking of the trend line is failed. We were expecting a breakdown, but against a falling dollar, bulls managed to fend off 1.6630 mark. We believe that the growth was delayed in time, but there is bullish trend on H1 and when it will unfold is unknown. There is no divergence against the trend, but this is only indicates possible correction.

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