Fundamental analysis of FOREX for April 19, 2021
According to Christine Lagarde, the Eurozone resembles a patient who came out of intensive care on two crutches. Now the speed of recovery is more dependent on the patient himself.
Of the positive factors, the acceleration of the rate of vaccination should be noted. As of April 16, citizens received about 100 million doses.
On the other hand, the market is expected to soften the rhetoric of the ECB and weak releases of European business activity, which complicates the life of euro buyers
So far, however, apart from the head of the Central Bank of the Netherlands, there are no people wishing to change the course of monetary policy in the Governing Council of the ECB. At the last meeting, the volume of the asset purchase program was expanded from € 15 to € 19 billion, but looking at the growth of European bond yields, “pigeons” can further increase the asset purchase program.
In mid-April, one of the main drivers of EUR / USD strengthening was the divergence of yields on US and Eurozone bonds. As for the index of economic surprises, here the European currency looks undervalued against the US dollar.
In March, the statistics of the United States disappointed investors, so even very modest expectations of economic releases in the Eurozone will support new attacks by EUR / USD buyers.
At the same time, the pair, given a favorable fundamental background, does not show stable growth, especially since US stock indices are rewriting their highs, and Treasury yields are declining. What will happen if the S&P 500 begins to correct and through currency correlation puts pressure on risky assets?
We do not think that the potential correction of US stock indices will be deep. The optimistic fundamental background and the positive news of the Eurozone will allow the EUR / USD buyers to use corrective declines to enter new purchases in the 1.1880 and 1.1930 directions. Longs on the breakout of resistance 1.1990 are also relevant.