European majors dragged lower on the back of the Brussels terrorist attack

General market theme
Currency markets were back in action yesterday and the price action picked up pace but not in a favorable manner for the European majors. Both the Euro and the Pound were in the red throughout the day and of course the pace was set early in the morning when investors received the news of another terrorist attack in the heart of Europe. The terrorist attacks in Brussels stroke fear in the hearts of investors once more and the reaction was a selling bias in the Euro, the Pound and the major stock exchanges. However we should expect this reaction to be limited and losses to be reversed especially on the Euro where the fundamental drivers haven’t changed at all.

Price action highlights
The Euro dropped lower on the back of the attacks in Brussels and the negative bias took the currency to the 1.1200 level and this morning the Euro is trading slightly lower than that. The business confidence reports printed in a mixed manner yesterday with the IFO Survey printing with a positive bias but the ZEW report came out worse than expected. Nevertheless though it was the uncertainty that a terrorist attack always brings along that dragged the Euro lower and as such we are not convinced that the decline has more legs.

The Cable on the other hand dropped heavily yesterday and lost more than 200 pips over the past 24 hours on the back of the attacks in Brussels but also after the bearish inflation reading. Prices growth printed worse than expected for the previous month and that along with the attacks and the general bearish bias surrounding the Pound sent the UK currency to trade below the 1.4200 level. The reaction from these levels hinges on fresh news but as long as the Brexit risk remains undecided the Pound will have a hard time to climb significantly higher.

Focus of the day
Today the economic calendar is relatively empty of anything important as we draw closer to the Easter Holidays. Apart from a tier-3 Consumer Confidence report from the Eurozone and the New Home Sales figures from the US there are no other fresh news to expect. Both reports are not considered market-moving hence we might see limited price action on the back of yesterday’s reaction to the Brussels attacks.