EUR/USD Daily Video, 04 April, 2016

[Sive Morten]

Good morning,

Since EUR has not hit some closely stand upside targets - next week we will be watching for that:




The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.

 

[Major_Tom]

Before video, I have red your great analisys on Forex Weekly report. Thank you very much Sive.

 

[IrwanI]

Thanks Sive,great idea.

 

[Zilvinas]

So, remembering our discussion last week, despite Yellen being dovish Non-Farm and especially Wages were good. As I thought maybe it's central bankers game to make price steady in a specific range (fulfil one of their mandate). What are your thoughts about this, Sive, I mean the possibility of central bankers playing a price stability game (one members talking hawkish, others dovish, and their knowing of what data will be)?

 

[IrwanI]

They(FED) will keep the price as low as they can before the next rate hike so the dollar not to high after the hike but beware of BOJ intervention they are the dovish central bank for now.(currency war)

 

[Sive Morten]

So, remembering our discussion last week, despite Yellen being dovish Non-Farm and especially Wages were good. As I thought maybe it's central bankers game to make price steady in a specific range (fulfil one of their mandate). What are your thoughts about this, Sive, I mean the possibility of central bankers playing a price stability game (one members talking hawkish, others dovish, and their knowing of what data will be)?

Well, this could be one of possible explanations. But, I can't link EUR jump after ECB comments and Fed comments. If they would like to keep rate stable - Fed probably should support hawkish comments to keep USD flat. But they have followed ECB and put USD even lower...
If you see logical chain that could explain this theory - let's discuss it here. Currently I can't recognize it yet. Right now at first glance, it seems that every Central Bank try to save its own economy. But simultaneously they would like to safe as more room for further dovish steps as possible compares to rivals...

 

[Zilvinas]

But simultaneously they would like to safe as more room for further dovish steps as possible compares to rivals...

Or... if I rephrase this sentence in another way: "FED would like to safe as more room for further hawkish steps as possible..".
So, if we put this sentence like that what possible another (alternative) view we can get?
IMO, then logical chain maybe would be that after ECB massive stimulus plus Brexit FED is afraid of further USD appreciation, because many economic analists say that too high USD appreciation (excange ratio) makes financial conditions tight. If financial conditions are tight then you don't need higher interes rate, because inflation will be and stay very low, it won't flucuate in higher manner (tight financial conditions = higer interest rates).
But if I understand clearly, FED don't want that (I mean they don't want tight financial conditions without normal interest rates) because their main objective is to normalize interest rates, to return as quickly as possible to normal interest rates. But they can't do that cause of too high USD appreciation (excange ratio). So, now FED being a little dovish is just a game to let a price to be in their preffered range or even make USD more depreciate: "to safe as more room for further hawkish steps as possible".

That's my view and thinking. But maybe I'm wrong, I don't know

PS. about EUR jump after ECB massive stimulus, I've already told my thoughts in earlier comments. IMO Super Mario made a mistake announcing that were would be no further negative rates in the future.