Equilibrium has been restored…Rate dynamics and recommendations on EUR-USD and GBP-USD. by OpenForex.com

Equilibrium has been restored…Rate dynamics and recommendations on EUR-USD and GBP-USD.

08:13 04/02/2004

Equilibrium has been restored…Rate dynamics and recommendations on EUR-USD and GBP-USD. After last week’s rally, price on EUR has returned to equilibrium zone of 1,2330-1,24 - to price triangle bounds. Breaking out 2 trend line and lines of Williams’ alligator in upward direction is a characteristic sign of bulls’ readiness to start of global uptrend. The situation is still quite indefinite though. Positive corporate data on the U.S. continue supporting the dollar. The head of ECB Jean-Claude Trichet gives economists no grounds to expect interest rate reduction later this year. It was quite clear form his words that Bank was not ready to revise inflationary forecasts and forecasts on Eurozone economic advance aside reduction. In his speech that he made at the press conference, he mentioned the following: recent rise of the Euro should reduce inflationary pressure; ECB was expecting some volatility of inflation in the short-term period; there existed signals of capital investments in Eurozone; ECB would keep on supporting price stability in the future; there were no reasons for slowing down economic recovery in the short-term period; Eurozone economic recovery will continue in 2004; ECB did not change its point of view on monetary policy. Kamal Sharmae, currency strategist of Dresdner Kleinwort Wasserstein, said that markets expected a “milder” statement to be made by Trichet. “His words definitely mean that there would be no interest rate reduction in the nearfuture”, - comments Sharmae. Hopes that interest rates would be reduced in the nearest three months have been growing up to the present moment. Now, such expectations would decrease. Institute for Supply Management, ISM Institute for Supply Management informed on Thursday that production activity index rose 62,5 in the U.S. in March compared to 61,4 in February. Any index value higher than 50 points at increase in production activity, index value lower than 50 points at activity reduction. The given index is calculated by means of interviewing supply managers of American production companies. March value turned to be higher than forecasted. According to Reuters survey, in average, economists expected index to fall 60,0 in March. The U.S Labor Department informed reduction in the number of Americans who filed new claims for state unemployment benefits. The given indicator turned out to be lower than this year’s average level. During the week that ended on March 27, Initial claims reduced to 342000 form the revised 345000. Last year’s average indicator equaled 402100. This year’s average indicator is 351460. Recommendations: stay out of the market so far. Recommendations: stay out of the market so far.

The forecast was created by trans1.