EUR/USD Are you ready for a strong dollar?

hello,

In reference to the previous entry on the main issues of the meeting of the ECB ECB press conference

Not much, we learned what the ECB wants to do with the strong euro, have not met reliant bad news, which would lead investors to buy the dollar. And yet, it happened.

According to an earlier analysis <my technical analysis> market managed to achieve the expected movement which resulted in quite a high profit. The current analysis EURUSD, please watch chart number 4.

Looking at the bond market or on a short-term interest rate contracts (FRA 3×6) it can be concluded that at this moment selling the correction in the EURUSD is the right strategy.

Both spread yield of 2-year bonds GER-US:

chart 1. spread between 2Y GER Bond and US Bond

and FRA 3×6 relative to the EURUSD indicate the possibility of deepening falls:

chart 2. FRA 3x6 relative to the EUR/USD

Overliquidity in the euro area continues to decline

chart 3. overliquidity in the euro area

Banks reported to the ECB's willingness to repay more than 3.3 billion of loans in the next week, after the repayment of EUR 1.75 billion this week. This of course should favor further decline in excess liquidity in the banking sector in the euro zone.

chart 4. current technical analysis EUR/USD 2014-05-11

Barcalys about EUR/USD

Thursday's session brought the biggest volume this year, which proclaims the downward sentiment must persist for a long time. In our opinion, any increases to 1.39 can be used to take short positions.

chart 5. high volume after the friday's session

BoAML about ECB

The meeting of the ECB Mario Draghi and words opened the way to cut interest rates at its next meeting. However, in our opinion, the movement is not so obvious. If the EURUSD will fall in around 1.36 the ECB will not need to take action.

Goldman Sachs about EUR/USD
The reversal of the trend is visible, in addition it happened in the area of new high. The first important resistance is around 1.3788, support around 1.3674 In this movement should track the behavior of Italian and Spanish bonds. If they remain strong, the potential for declines in the euro will be limited.

regards,
oscarjp