Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from Hamburg and welcome to our first Daily FX Report for this week. A total of 2,460 people were confirmed killed in the 7.9 magnitude quake which was the worst disaster in Nepal since 1934 when 8,500 died. The death toll is likely to rise as rescue workers struggle to reach remote regions. Thousands of desperate Nepalese spent another night in the open and have been terrorized by strong aftershocks. Several countries rushed to send aid and personal while the hospitals are overwhelmed.
Anyway, we wish you a successful start into a new trading week!
Market Review – Fundamental Perspective
Last week data about US orders of durable goods, manufacturing, and new home sales all came in weaker-than-estimated. Fed officials are going to decide on monetary policy on April 29, the same day a report is projected to first quarter economic growth slowed. The Federal Open Market Committee was split at its meeting in March on when to begin rasing rates, which were in a range of zero to 0.25 percent to support the economy. In addition economics estimated that U.S. gross domestic product expanded at 1 percent annual rate in the first quarter in 2015, down from the prior 2.2 percent in the fourth quarter 2014. This lead to raising questions about whether the Federal Reserve will have scope to increase interest rates this year. As a result the USD declined for a second week. It dropped against most of its major peers and the market assumed that the USD will go through a period of consolidation. In the past week the USD decreased 0.4 percent versus the EUR and is currently trading at 1.0866. The USD/JPY weakened 0.5 percent to 118.99. The EUR/JPY was at 129.21.
On Friday Euro zone finance minsters warned Greece that its leftist government will get no more aid until it agrees a complete economic reform plan, as Athen moves closer to bankruptcy. The chairman of the euro zone finance ministers Jeroen Dijsselbloem said that there will be no partial disbursement for partial reforms for Greece.. Nevertheless yesterday Greek Prime Minister Alexis Tsipras ang German Chancellor Angela Merkel agreed in a phone conversation to maintain contact during talks between Athens and its lenders to reach a debt deal. Euro zone ministers bemoaned talks they they felt were going nowhere and one minister even said on Friday that maybe it was time governments prepared for the plan B of a Greek default.
Technical Analysis
EUR/USD (4 Hours)
Two weeks ago the decrease of the EUR versus the USD had been stopped at the support line around 1.0535. Since then we can observer a trend reversal with strong gains for the EUR but it remains to be seen if this trend can persist. The current resistance level around 1.0881 and especially the next resistance around 1.1032 are very important levels which have to bee broken by the pair otherwise the current trend will come to an end. The MACD supports futher increases.
Support & Resistance (4 Hours)
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