The dollar was given a support to…Dynamics of rate and recommendations on EUR-USD and GBP-USD. by OpenForex.com

The dollar was given a support to…Dynamics of rate and recommendations on EUR-USD and GBP-USD.

06:49 03/29/2004

The dollar was given a support to…Dynamics of rate and recommendations on EUR-USD and GBP-USD. Last week, the dollar was mainly pressed by security concerns following the militant attacks in Madrid. Traditionally, such events result in the runaway from the dollar. But by the middle of the week, there appeared a significant economic factor that would probably limit dollar weakening against major national currencies. Players assume that ECB might reduce the rate of refinancing. The given suppositions are grounded on the statements made by Jean-Claude Trichet, the chairman of ECB. In his interview to German newspaper Handelsblatt, Trichet pointed at consumer spending weakness in Eurozone and noted that ECB would have to change its forecast on economic advance of Eurozone aside deterioration, in case consumer spending does not rise. That made the market suppose that ECB might reduce the rate of refinancing in order to push consumer spending and economic advance of Eurozone up. The dollar was supported by the release of corporate fundamental indicators on Euozone and the U.S. Opinion that the rate might be reduced got stronger after the release of weak German data. German Research Institute Ifo stated that business confidence index, calculated by Ifo, dropped to 95.4 in March compared to 96.4 in February. Ifo index had been reducing for the second straight month. The given index is calculated by means of interviewing 7000 managers of German companies. According to Ifo comments, respondents, interviewed prior and after the militant attack in Madrid, showed no significant difference in estimating economic situation. “Thus, March business climate deterioration can not be ignored as a temporary thing”, - is said in Ifo comments. “Weak domestic demand still negatively affects economic recovery. Concerns [of companies] in terms of economic revival continuation has got stronger”, - noted Ifo, pointing at steep sentiments decline in the retail sector of German economy. The president of Ifo Hans-Werner Sinn said in his interview to CNBC channel that business confidence survey data pointed at significant risk that threatened revival of the largest Eurozone economy. “In the given situation, time has come for reducing interest rates in Europe”, - said Sinn. The president of Ifo appealed to ECB to reduce the rate of refinancing on 0,25 interest-bearing points. Otherwise, he said, economic revival in Eurozone “would fail”. On Friday, final value of Michigan sentiment index for March was published. The given index is quite a valuable one and index data can determine currency movements on the dollar for the nearest 2 weeks. Attention of traders is focused on USD/JPY pair. Compared to European currencies, national currency of Japan is getting stronger on the background of positive fundamental data that shows strengthening of the economy. Technically, the yen price is approaching significant level of support 105 yen per dollar. Analysts expect that the Bank of Japan might start massive intervention from the given level. Recommendations: the previous recommendations on EUR remain: price has reached a serious level of support on EUR 1,2095-1,2045. In case of breaking that zone out, sales are possible, the closest target 1,2 and long-term target 1,1870. Stop is at 1,2160. Recommendations: the previous recommendations on EUR remain:price has reached a serious level of support on EUR 1,2095-1,2045. In case of breaking that zone out, sales are possible, the closest target 1,2 and long-term target 1,1870. Stop is at 1,2160.

The forecast was created by trans1.