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Euro / dollar continues to recover

27.05.2014
 
     
This Tuesday morning the main currency pair is trading at an increase, using the background information as the support for a technical rebound.

 

Thus, recovery of the euro/dollar continues for the second day in a row. This is the technical rebound, the market has patiently waited for, and it should prove to be productive.

 

On the one hand, some support for the euro/dollar came from the comments by the head of the European Central Bank, Mario Draghi, who spoke yesterday at a conference in Portugal. The ECB, in general, once again confirmed that it would act if inflation proves weak. And we remember that the main cause of the weakening of inflation was earlier called by Draghi – an expensive euro. The parallel is obvious: if inflation is not rehabilitated, the ECB will put pressure on the euro.

 

During the previous week the decline in the euro/dollar exceeded 100 points, the pair moved consistently and predictably. Now a technical correction may well raise the instrument to around 1.3695.

 

This afternoon interesting statistics on the U.S. economy will be released, including a report on orders for durable goods in April. Surprises are not excluded, and it is not a fact that they will be the pleasant kind.

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The Japanese Yen keeps investors in suspense

27.05.2014
 
     
The USD/JPY pair retreats once again, but prospects are quite positive: it is possible that the instrument will soon return to a recovery process.

 

Japanese yen has long been unsurprising with the logic of it’s movements, but the previous wave of recovery in the USD/JPY pair, contrary to expectations, was very short - only three days, though that allowed to retire from the local minimum.

 

So far the "bullish" targets are as follows: 102.22, 104.13 and 107.50. However, in order to head in that direction, a driver is needed.

 

From a fundamental point of view, the Japanese economy is now more or less stable. The Bank of Japan is monitoring the reactions in the economic system after the April growth of the sales tax rate. Here everything is more or less transparent: an increasing tax level will somewhat slow down the strengthening of the GDP, but it was necessary. The BoJ is ready to expand the incentive program, if required by real conditions.

 

At the moment that asset repurchase program is 60-70 trillion yen per year.

 

By the way, the program has no time constraints.

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