Trichet Signaled April Hike, Backed by ECB Chorus, EUR/USD Breached 1.4 EUR/USD surged sharply higher last week and breached 1.4 level as markets' rate speculations was further affirmed by ECB President Trichet's hawkish messages. While the ECB left the main refinancing rate unchanged at 1%, Trichet signaled an 'increase of interest rates in the next meeting is possible' and 'strong vigilance is warranted'. Also, the reference that interest rates are 'appropriate' was taken out from the press statement. The ECB staff revised up forecasts for economic growth and inflation. Annual real GDP will expand in a range between 1.3-2.1% in 2011 and between 0.8%- 2.8% in 2012. The lower ends of the ranges have been lifted when compared with December's estimates. As a result of 'considerable rise in energy and food prices', the ECB also revised up its inflation forecasts. Annual HICP inflation will probably grow in a range between 2-2.6% for 2011 and between 1-2.4% for 2012. Full Report Here... | 
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EUR/USD Weekly Outlook EUR/USD rose further to 1.3837 last week but faced some resistance ahead of 1.3860 and retreated. A temporary top is at least formed and initial bias is neutral this week. As noted before, we're favoring the case that consolidations from 1.3860 is not over yet. That is, rise from 1.3427 is possibly the second leg of the consolidation. Hence, even in case of another rise, the pair would face strong resistance at 1.3860 and bring another fall. Below 1.3704 minor support will flip bias back to the downside for 1.3427 as the third leg consolidations. But after all, outlook in EUR/USD will remain cautiously bullish with 1.3253 cluster support (61.8% retracement of 1.2873 to 1.3860 at 1.3250) intact. Rise from 1.2873 is still expected to resume sooner or later. Meanwhile, decisive break of 1.3860 will confirm that rise from 1.2873 has resumed and should target 1.4281 high next. Read more... |
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