The dollar keeps strengthening | 03 Outubro 2014

Euro

The EUR/USD is under pressure caused by the positive investors’ attitude towards the US dollar and the bleak eurozone economic picture as well as the expectation that European Central Bank will intensify the monetary stimulus. The ECB President Mario Draghi repeated once more that the Central Bank was ready to use further unconventional measures to prevent the dangerously low inflation.

After the August growth and a sharp drop in September, the Germany consumer climate index will drop a little bit from 8.6 to 8.5 in October. If purchasing managers’ indices and the Ifo index had begun to lose ground long ago, the consumer sentiment one would have preserved its stability. But a series of the negative economic news are beginning to undermine the consumer confidence.

Trading recommendations

It is recommended to sell with the first target 1.2650 according the euro rate. Once this target is overcome, the shorts will be relevant to 1.2600.

Pound

The pound fell on the Friday trading. But before this happened the GBP/USD rate grew higher after the chairman of the Bank of England Governor Mark Carney said that the interest rates rise was getting closer. Carney warned about the danger connected with the very soft monetary policy and the low interest rates that could stimulate the risk.

The 10-year US and UK bonds profit abilities differential was not changed last week, pointing out to the side trend.

Trading recommendations

It is recommended to sell with the target of 1.6120 according to the pound rate. Once the target is overcome, the shorts will be relevant to 1.5960.

Yen

The Japan Labor and Welfare Minister Yasuhisa Shiozaki denied media reports that the government may postpone the pension fund investment reform that is worth $1.26 trillion. The reform involves the investment growth in Japanese equities and foreign assets, these media reports led to the yen rise.

The Michigan University analysts forecast the US consumer confidence index with a high value at 84.7, but the actual outcome may become a little worse.

Trading recommendations

It is now recommended to buy with the first target 110.10. If the first target is overcome, the longs will be relevant to 111.05.