We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • Do think your #tradingstyle is of a #FOMO trader? How can you trade that to #JOMO? Find out: https://t.co/FyO2gM0WVi https://t.co/JKgCD09N1R
  • The $USD may be preparing to stage a reversal against the Singapore Dollar as USD/SGD trades within a Falling Wedge. This is as the USD/IDR downtrend remains intact. Get your market update from @ddubrovskyFX here: https://t.co/7fzeWrnlc1 https://t.co/eiXsZjgJZy
  • The $AUDUSD and $EURUSD downtrend may prolong as traders counterintuitively buy into their descent. Meanwhile, the USD/CAD uptrend may accelerate on rising net-short bets. Get your market update from @ddubrovskyFX here: https://t.co/dlzJ31kf3f https://t.co/hPDcXEoed3
  • US Dollar Outlook: $USD Price Volatility & Implied Trading Ranges for Next Week - via @DailyFX Full Analysis: https://www.dailyfx.com/forex/fundamental/us_dollar_index/special_reports/2019/11/15/us-dollar-outlook-usd-price-volatility-implied-trading-ranges.html https://t.co/er8y1YZVpg
  • $USDJPY has pierced chart support, signaling Yen gains ahead. If that portends a broader anti-risk shift in market sentiment, a breakdown in Japanese stocks may follow. Get your market update from @IlyaSpivak here:https://t.co/sgfv4USOGR https://t.co/rZL6gWsknf
  • RT @economics: Oval Office scuffles, tariff threats, and diminished expectations: An inside look at how Trump’s trade war went from method…
  • We still don't know if there are auto tariffs coming from the White House. The deadline for a decision was Thursday. Crickets
  • $EURUSD Daily Pivot Points: S3: 1.0936 S2: 1.0974 S1: 1.0998 R1: 1.1037 R2: 1.1052 R3: 1.109 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • The $CAD continues to take a hit against the US Dollar after USD/CAD very nearly experienced a major long-term support-break at the end of October. Get your USD/CAD market update from @PaulRobinsonFX here:https://t.co/qeWFmoLwKt https://t.co/G0o4uIV2k7
  • US Yield Curves Update: 2Yr/5Yr: 3.8 2Yr/10Yr: 22.2 2Yr/30Yr: 69.5 5Yr/10Yr: 18.6
Forex: Euro Rally Gathers Pace On Rate Expectations, British Pound To Hold Steady Ahead Of BoE

Forex: Euro Rally Gathers Pace On Rate Expectations, British Pound To Hold Steady Ahead Of BoE

2011-03-07 13:30:00
David Song, Currency Strategist
Share:

Talking Points

  • Japanese Yen: Weighed By Risk Appetite
  • British Pound: Holds Narrow Range Ahead Of BoE
  • Euro: Moody’s Cuts Greece’s Credit Rating
  • U.S. Dollar: Consumer Credit On Tap

The near-term rally in the Euro gathered pace on Monday, with the EUR/USD advancing to a fresh yearly high of 1.4035, and currency traders may continue to turn a blind eye to the sovereign debt crisis as the European Central Bank talks up speculation for a rate hike. According to Credit Suisse overnight index swaps, investors are pricing a 100 percent chance for a 25bp rate hike at the next meeting on April 7, and the rise in interest rate expectations may continue to fuel demands for the Euro as the central bank looks to curb the risk for price growth. In turn, the EUR/USD may continue to retrace the decline from back in November, and the exchange rate may work its way back towards the 2010 highs as European policy makers raise their outlook for growth and inflation.

Nevertheless, Moody’s Investor Services held a negative outlook for Greece after cutting the region’s credit rating to B1 from Ba1, and the risk for contagion is likely to intensify going forward as the governments operating under the fixed-exchange rate system face rising borrowing costs. As the EU struggles to meet on common ground, European policy makers may fail in addressing the debt crisis at the special summit on March 11, and the underlying weakness within the economy may bear down on the exchange rate as the region faces an uneven recovery. As a result, the rally in the Euro could be short-lived, and the single-currency may consolidate over the near-term as European policy makers struggle to restore investor confidence.

The British Pound fell back from an overnight high of 1.6340 to maintain the narrow range from the end of the previous week, and the GBP/USD may trend sideways ahead of the Bank of England rate decision on Thursday as investors weigh the outlook for future policy. The BoE is widely expected to maintain its current policy in March, but there could be a growing shift within the MPC as price pressures in the U.K. intensify. As market participants speculate the central bank to gradually normalize monetary policy this year, the GBP/USD looks poised to make a run at 1.6400 as it retraces the decline from back in 2009, and the rally in the pound-dollar may gather pace going forward as growth and inflation in the U.K. accelerates.

The U.S. dollar lost ground against most of its major counterparts, with the USD/JPY slipping to a low of 81.94, and the greenback may face additional selling pressures throughout the North American trade as investors raise their appetite for risk. However, as consumer credit in the world’s largest economy is expected to increase another $3.400B in January after rising $6.099B in the month prior, the data could spark a bullish reaction in the greenback as the economic recovery gathers pace. The ongoing expansion in consumer credit is likely to instill an improved outlook for the region as private sector consumption remains one of the leading drivers of growth, and the Fed may continue curb speculation for another round of quantitative easing as the downside risks for the real economy diminish.

Will the EUR/USD Continue to Retrace the Decline From November? Join us in the Forum

Related Articles: Weekly Currency Trading Forecast

To discuss this report contact David Song, Currency Analyst: dsong@dailyfx.com

FX Upcoming

Currency

GMT

EST

Release

Expected

Prior

CAD

13:30

08:30

Building Permits (MoM) (JAN)

0.3%

2.4%

USD

20:00

15:00

Consumer Credit (JAN)

$3.300B

$6.099B

Currency

GMT

Release

Expected

Actual

Comments

NZD

21:45

Building Permits (MoM) (JAN)

--

9.6%

Rebounds from sharp contraction in Dec.

AUD

23:30

AiG Performance of Construction Index (FEB)

--

44.6

Highest since June ‘10

JPY

23:50

Official Reserve Assets (FEB)

--

$1091.5B

Continues downward trend

AUD

00:30

ANZ Job Advertisements (MoM) (FEB)

--

1.2%

Slowest expansion since Oct ‘10

AUD

05:00

Foreign Reserves (AUD) (FEB)

--

39.9B

Lowest since Sept. ‘08

JPY

05:00

Coincident Index (JAN)

105.9

106.2

Hits record high

JPY

05:00

Leading Index (JAN)

102.3

101.9

Highest since April ‘10

EUR

09:30

Euro-zone Sentix Investor Confidence (MAR)

17.2

17.1

Continues rising trend

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.