Daily Forex Market Preview, 27/03/2018
The U.S. dollar continued to extend declines on Monday as the U.S. dollar index was seen falling to fresh monthly low. The declines came amid a slow trading day. Economic data was sparse with only second tier data. The Dallas Fed manufacturing report showed that manufacturing production index fell to 12.7 compared to 27.9 in February. Business activity was also seen weaker with the index posting a print of 21.5 compared to February’s 37.2.
The euro and the Pound sterling posted strong gains as the market expectations on rate hikes strengthened. ECB member Weidmann spoke to reporters yesterday and came out hawkish on monetary policy. Weidmann is widely tipped to be the next ECB President.
Looking ahead, the economic calendar for the day will see the release of the flash inflation data from Spain. Headline consumer prices are forecast to rise 1.5% on the year, accelerating from 1.1% previously.
Later in the day, the Conference Board’s consumer confidence data for the U.S. Consumer confidence is forecast to rise to 131.2, up from 130.8 previously. If the actual data beats estimates, this could be another high in the U.S. consumer confidence as measured by the conference board.
The Richmond Fed will also be releasing the Richmond manufacturing index data. Economists forecast that manufacturing activity in the region slipped to 23 compared to 28 that was registered previously.
EURUSD 27-03-2018 Intra-day analysis
EURUSD (1.2452): The common currency was seen building up on the bullish momentum as the EURUSD soared to fresh monthly highs on Monday. The gains came amid a slow trading day but the common currency got a boost from hawkish comments from ECB’s Weidmann. Weidmann said that the ECB should phase out its stimulus purchases in order to give itself more room in the future in case the economy slows. Weidmann also commented on interest rates in mid-2019 calling it “not entirely unrealistic.” The euro currency was seen breaking past the 1.2363 handle where support was established. This quickly resulted in a strong rally. However, we expect the gains to post a correction in the short term especially with the bearish divergence seen on the 4-hour charts. Any declines are likely to stall back at the 1.2363 level in the near term.