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3 April Forex daily review

Sergiy Zlyvko
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On Thursday, the dollar index during ECB President Mario Draghi’s performance struck 10-day sideways channel and closed up. European Central Bank following the meeting left interest rates unchanged at 0.25%. After the announcement of the decision, EURUSD strengthened slightly.

Splash of volatility was observed during a press conference of Mario Draghi. At the beginning of Draghi’s speech, dollar index weakened, but to the end of an hour it regained all losses and the next hour growth resumed with renewed force. EURUSD after a sharp rise to the level of 1.3805, fell to 1.3695 mark (-110 points). Draghi said that the bank expects low inflation for an extended period and, if necessary, may develop additional measures in order to fight the inflation.

Yesterday we wanted to make the dollar index reached 80.75 points. The market has taken into account our wishes, but not fully, because ECB left its monetary policy unchanged and Draghi supported dollar bulls by promises. The dollar index rose to 80.55 and after the end of the European session it moved to sideways.

The euro was so powerful that even a weak U.S. data could not support bulls. The index of business activity in the non-manufacturing ISM from March increased from 51.6% to 53.1%, but was below the forecast of 53.6. The number of initial claims for unemployment benefits rose to one-month highest point at 326 thousand against the forecast of 317 thousand This is positive factors for the dollar. The new orders index in March rose from 51.3 to 53.4. The employment index rose by 6.1% to 53.6% versus 47.5% in February.

Today the attention of financial markets will be focused on the publication of the U.S. labor market data. The report strongly influences the market. The volatility on Friday should be higher than yesterday.

It is expected that employment growth in March in non-agricultural sector will be 196-200 thousand in the U.S. In February, 175 thousand new jobs have been created. Unemployment rate is forecasted at 6.6% vs. 6.7% a month earlier.

On 12.30 GMT we consider dollar’s pullback and after NFP report the growth of the dollar should be continued. On major pairs we did one scenario because we are waiting for NFP value is not less than 195 thousand jobs.

Crosses yesterday supported the Australian dollar. British fell on British data, the euro – after Draghi’s speech. Double top is cancelled, since the conditions for this model are not met. But we still stick to the script to drop to 0.9180.

The day was impulsive, but during the day USDCHF strengthened. Growth stopped at 0.8925. At 9.26 GMT the pair was trading at 0.8930. Before 12.30 GMT we expect flat, after a report on U.S. labor market growth. In my estimation, with good NFP, the decline is obtained by 0.8955 mark.

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