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1 April Forex daily review

Sergiy Zlyvko
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DXY, EURUSD and USDCHF dynamics met our forecast scenarios. Due to divergent oscillations between major pairs, dollar index is trading near 80.10 mark. Evening report showed growth of business activity in the U.S. manufacturing sector in relation to the previous month, but the index remained below predicted value.

According to published data, in February ISM manufacturing index rose from 53.2 to 53.7 points (the forecast was 54). Employment component in the manufacturing sector ISM fell from 52.3 to 51.1 (forecast was 52.8).

The attention of traders focused on a decision to be taken on Thursday at a meeting of the Governing Council of the ECB and Friday’s NFP report. In this connection, on Wednesday the report on employment ADP will cause interest of market participants, which will be published at 12.15 GMT and report on factory orders in the U.S. at 14.00 GMT.

At 8.30 GMT in Britain report on business activity in the construction sector will be released. The indicator has a strong influence on the pound, if the actual value deviates from the forecast. According to the forecast, it is expected in March business activity index will rise to 63.1 from 62.6. GBPUSD pair due to mixed data show mixed trends, so let’s watch out for EURGBP cross-rate. It determines the direction of EURUSD and GBPUSD pairs.

On Wednesday we expect dollar index movement to 80.25 and closing with an increase of about 80 points. EURUSD is ready to fall, but it can update maximum on the news at 9.00 GMT about GDP and manufacturing inflation in the Eurozone. There is one divergence, but the second may occur too. But it will be a strong signal to fall.

On Tuesday, EURUSD updated highest point and is trading at 1.3805. According to the forecast, we consider the growth to 1.3815 and then a fall to 1.3765. We admit euro’s growth to 1.3835 upper channel. Euro rises on expectations that the ECB on Thursday will not soften its monetary policy. Press conference of Mario Draghi will be in the center of interest. At 9.00 GMT the data on GDP and manufacturing inflation in the Eurozone will be released. It is unlikely to be a reaction on GDP, since it exceed the final value. But inflation data ahead of a meeting of the ECB is interesting.

On weak manufacturing PMI GBPUSD fell to 1.6620 level. For eleven hours GBPUSD is trading in a narrow range. Given that AO indicator is negative, as predicted we are considering the growth to 1.6655, followed by a fall to 1.6585 mark. We reinsured because stochastic and AO show mixed picture. At 8.30 GMT the index of business activity in the UK construction sector will be published. British pound can go down without growth on weak report.

From the maximum rate of 0.9300 AUDUSD fell to 0.9220 level. After the breakdown of 0.9215, Double Top model is confirmed. After fixing the rate below 0.9215 mark, the road to 0.9135 will be opened. We propose to consider 0.9280 as interim target.

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