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EUR / USD
1.08015
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110.328
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0.98353
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EUR / JPY
119.171
AUD / USD
0.66949

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mazri_2008

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Eurozone

For the euro zone, no data is expected until Thursday to publish data that may change the market's assessment. The euro is under pressure for several reasons as EUR/USD fell to strong support at 1.1260/70.

An attempt to test this level is more than likely to occur during the day, and if successful, the focus of decline will move to the key level of 1.1215.
 
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Great Britain

The pound reacted negatively to the statistics published on Monday since all of them were worse than forecasts without exception which was an unpleasant surprise for the players.

In 2018, the Preliminary data on GDP growth amounted to 0.2% in Q4 and annual growth rates of 1.3%, which is worse than 1.6% a quarter earlier. The main growth was noted in the service sector, and as for construction and industrial production, a slowdown was significant.



The volume of commercial investments fell in 4 square meters 1.4%, while a 0.2% growth was forecasted, which decreased for the whole year for 3.7%. This is the worst figure in more than 5 years.

The decline in the industrial sector in December also turned out to be stronger than forecast. As a whole, it grew by -0.5% and in the manufacturing industry, it shows -0.7% growth.

In both cases, although symbolic, these were predicted in plus. For the first time since 2009, all 4 key indicators for the industry went into the negative zone and taking into account the slowdown in PMI in January, we can assume that this is not yet the limit.

The data on the trade balance in December also turned out to be worse than the forecasts and the NIESR report on GDP growth rates over the past 3 months was already finished, taking into account the month of January. The calculated growth rates were 0.2% against the forecast of 0.3%.

The Bank of England lowered growth forecasts but increased the possible damage from Brexit and actually abandoning the plans to raise rates this year. Hence, there are no macroeconomic grounds for growth in the pound at the moment. The only thing that can throw it above 1.32 is an agreement with the EU on an agreement for a transitional period and this will happen only if the parliamentary crisis is overcome.

Theresa May is going to appeal again to the Parliament for a request to give her the opportunity to speak until Thursday and try to convince the lawmakers to accept her plan. But for the time being, it must be assumed that the GBP/USD pair is under strong pressure, the immediate support of 1.2820 may not stand up to the bears.
 

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EUR/USD: a correction within the downtrend

The US dollar shows amazing resilience throughout the market. The dovish sentiment of the Federal Reserve has only temporarily weakened the position of the US currency: only two months after the pivotal meeting of the Fed, the greenback dominates in almost all pairs.

Moreover, many experts predict a further rise in the dollar, at least during the first half of the year. Thus, a rather paradoxical situation develops in the market when the soft policy of the US central bank does not prevent the national currency from showing a revaluation. The euro-dollar pair in this context is no exception: after the January surge to the 15th figure, the price gradually approaches the main price stronghold - the mark of 1.10.

However, for the time being it is too early to talk about the 10th figure. Despite the bearish moods on the pair, the EUR/USD bulls have two trump cards in their reserves that can come into play in the very near future. First, we are talking about the US-China trade negotiations, and secondly, about the prospects of Brexit.

If Beijing and Washington nevertheless conclude a truce, and London and Brussels find a compromise on the deal, then the euro will receive strong support, which will make it possible to test the 15th figure again. However, some analysts doubt that the upward impulse will grow into an upward trend. The main reasons for such doubts are connected, oddly enough, with the policy of the US central bank.

The fact is that the US Federal Reserve is, so to speak, in a kind of forefront of the latest trends in the financial world. It is a reference point for the central bank of the leading countries of the world (to some extent, naturally), therefore its decisions cannot be viewed in isolation, without taking into account its colossal influence.

Announcing a slowdown in monetary tightening, the Fed has given a definite signal that can be compared to the "domino effect." Following the US regulator, the Reserve Bank of Australia and the Reserve Bank of New Zealand softened their rhetoric. The European Central Bank also changed the tone of its statements: in December and in January, representatives of the ECB were very careful about its prospects for the coming months.


Just today, the head of the Bundesbank, Jens Weidmann, once again disappointed supporters of tight monetary policy with his soft rhetoric. He said that the risk of a systemic crisis in the eurozone still exists, but the European regulator should refrain from taking political decisions "as a response mechanism to the crisis."

And although here, Weidman hinted very transparently at the relationship between the Italian authorities and the ECB, the market took his words in a broader context. Almost all currency strategists of leading European banks do not expect any action from the European Central Bank regarding the interest rate this year.

Weidman's rhetoric served as just another confirmation of this, as he had previously consistently advocated the expediency of tightening monetary policy. Therefore, after the most ardent representative of the hawkish wing, relatively speaking, "surrendered," there are no real chances for a rate hike this year.

This suggests that the single currency does not have its own forces for any large-scale recovery. Growth in GDP and inflation in the eurozone slowed down, and German data disappointed more than others, since in many positions (in particular, in terms of retail sales) they fell to multi-month lows. A similar situation exists in France and Italy (the Italian economy has entered a recession stage).

Against this background, the dollar began to be in demand again due to the growth of anti-risk sentiment. Bulls of the EUR/USD pair should not expect a change in the trend in the near future, even if tomorrow's release of data on the growth of US inflation will be worse than expected.

Only the external fundamental background (China + Brexit) is able to drastically change the situation for the pair. Even the resolution of the issue of preventing a shutdown will not have a large-scale impact on the dynamics of the pair.



In other words, today's growth of the EUR/USD pair should be considered as a corrective recovery, but no more. The trend is still descending - this is indicated by signals on all the "higher" timeframes. On the daily, weekly and monthly charts, the Ichimoku Kinko Hyo indicator has formed a bearish Parade of Lines signal, and the price itself is between the middle and lower lines of the Bollinger Bands indicator.

The likely "ceiling" of corrective growth is located in the area of 144.50 - this is the lower boundary of the Kumo cloud on the weekly chart. This level of resistance to bulls to break a pair will not be easy, given the overall negative fundamental background for the euro
 

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Fundamental Analysis of AUD/JPY for February 14, 2019

AUD/JPY is currently quite impulsive with the recent bullish pressure after bouncing off the 78.50 area with a daily close. AUD is backed by positive economic reports despite the pressure from the US-China trade talks. AUD strength is expected to lead to further bullish pressure in the coming days.

Recently, the US-China trade tensions have fueled an economic slowdown in Australia which is mirrored in the weakest GDP data in last 10 years. Nevertheless, AUD found support from upbeat export data amid China's official trade balance figures.

Today MI Inflation Expectation also increased to 3.7% from the previous value of 3.5%. Moreover, recently Westpac Consumer Sentiment showed significant growth to 4.3% from the previous value of -4.7%.

Tomorrow RBA Governor Kent is going to speak about the key interest rate decisions which is expected to unchanged and monetary policy which may have certain affects from the global trade tensions.

In case the US and China eventually settle up a trade deal, it is expected to lead to further bullish pressure in the pair, enabling AUD to gain momentum against JPY.

On the JPY side, Bank of Japan's Governor Kuroda recently stated that it was his responsibility to achieve the BOJ's 2% inflation target by pursuing its stimulus policy and he would make sure to achieve it in the medium term. Kuroda is currently assessing the central bank's stimulus policy so that it would not cause side effects. Today Japan's Prelim GDP report was published with an increase to 0.3% from the previous value of -0.6% which failed to meet the expected value of 0.4% and Prelim GDP Price Index was published unchanged at -0.3% which was expected to decrease to -0.4%.

Meanwhile, JPY has been flat amid the recently published economic reports whereas AUD is firmer at present. Until optimism about the US-China trade talks boosts AUD growth in the coming days, AUD is expected to dominate JPY for a while.

Now let us look at the technical view. The price is currently trading above 78.50 area with a retest as well.

The bullish pressure is going to push the price higher towards 80.00 and later towards 82.50 resistance area in the coming days. As the price remains above 78.50 area with a daily close, the bullish pressure is expected to continue pushing higher in the coming days.

SUPPORT: 75.50, 77.50, 78.50

RESISTANCE: 80.00, 82.50

BIAS: BULLISH

MOMENTUM: NON-VOLATILE


 

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Fundamental Analysis of AUD/USD for February 14, 2019

AUD/USD has been quite corrective and volatile, trading below 0.7200 area with a daily close. AUD has been quite positive amid the recently published economic reports which led to certain bullish momentum. However, the question is still open how reliable and sustainable it would be in the coming days.

China is Australia's largest trading partner with over 30% of the Australian exports going to China. Trade tensions have fueled an economic slowdown in Australia. As a result, China's GDP came in at 6.4% in Q4 2018 which is the weakest quarterly GDP growth in the latest 10 years.

Recently AUD climbed higher in light of strong export data amid China's official trade balance figures while MI Inflation Expectation also increased to 3.7% from the previous value of 3.5%. Moreover, recently Westpac Consumer Sentiment showed significant growth to 4.3% from the previous value of -4.7%.

On the other hand, recently US CPI report was published with a slight increase to 0.0% from the previous value of -0.1% but it failed to meet the expectation for a 0.1% gain. The Core CPI report was published unchanged at 0.2% as expected but that did not quite help the currency to sustain the impulsive momentum it had over AUD.

Today US Core Retail Sales is expected to decrease to 0.0% from the previous value of 0.2%, PPI is expected to increase to 0.1% from the previous value of -0.2%, Retail Sales are expected to decrease to 0.1% from the previous value of 0.2% and Core PPI is expected to increase to 0.2% from the previous value of -0.1%.

Meanwhile, the US-China trade talks are pushing ahead as the deadline is approaching. If both sides do not settle a trade a deal by March 1, US tariffs on $200 billion worth of imports from China are scheduled to rise 25% from 10% which will eventually increase the inflationtary pressure and costs in the sectors of consumer electronics and agriculture. If the upcoming meetings do not contribute to the positive outcome of the trade talks, it is certainly bearish for AUD.

Now let us look at the technical view. The pair is currently trading higher above 0.71 area. Moreover, the price is expected to jump to 0.7200 and higher as the price remains above 0.70 area with a daily close and makes higher highs.

SUPPORT: 0.7000-50, 0.7100

RESISTANCE: 0.7200-50, 0.7350

BIAS: BEARISH

MOMENTUM: VOLATILE


 

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GBP / USD. May tries again to "conquer" Brussels

The pound closed the trading week with significant growth, reaching the border of the 29th figure. The British currency reacted to the rumors that London and Brussels will resume dialogue on the fate of the Brexit deal. And although all previous attempts to find a compromise ended in failure, this news still affected the GBP / USD bulls.

During the weekend, the rumors were confirmed: This week, Theresa May will meet not only the President of the European Commission, Jean-Claude Juncker, , but also with the leaders of all EU member of different countries.

The meetings will be attended by the main negotiators of the EU and the UK, Michel Barnier and Stephen Barclay. Before going to Brussels, May sent a letter to the members of the Conservative Party, in which she promised to seek changes from the EU authorities in the Irish backstay. She also urged her party members to unite and "sacrifice their own preferences for a higher goal."

This is not the first letter addressed to the Conservatives. But in the context of recent events, his rhetoric suggests that May is far from confident in the success of his European voyage.

It is known that the prime minister will discuss several compromise proposals with Europeans, the authors of which are British conservatives. In general, their essence boils down to avoid the introduction of the "backstop" mode into action.

But a compromise is always a bilateral concession, thus, it is not surprising that the prime minister is preparing the reason for the fact that London's demands will not be fully met (this is at best). As May asks, it is still an open question whether the British parliamentarians are ready to "step over themselves."

On the one hand, the hawks continue to criticize government actions, whereas the approval of the transaction requires the votes of all conservatives in parliament. On the other hand, there are only 40 days left to Brexit, and there are no real alternatives to the proposed deal.

Theresa May managed to cut off all the other (main) options in a few months - a repeated referendum, postponement of the British exit from the EU, resignation of the government and early elections. All of these scenarios have recently been considered "workers", but at the moment, their implementation is extremely unlikely.

In other words, it is too early to write off the "soft" Brexit option: by agreeing to additional negotiations, Brussels can make more substantial concessions that will make it possible to find a compromise solution.

Unfortunately, the date of the meeting between May and Juncker is unknown (but it is known for sure that it will take place this week). However, the date of another important event is known - on Tuesday, February 19.

The Attorney General of England and Wales, Geoffrey Cox, will inform the British parliamentarians about the amendments that need to be made so that Britain would not be tied to the back-stop regime forever. The results of this vote may affect the dynamics of the pound, although the main attention of traders will be focused on events in Brussels.


Despite the importance of political events, macroeconomic statistics should also not be ignored. Friday's retail volume data in the UK supported the pound. In January, the indicator came out of the negative area, reaching one percent on a monthly basis.

In annual terms, the indicator showed similarly strong dynamics, reaching 4.2%. Without taking into account the cost of fuel, the indicator also accelerated - up to 1.2% in monthly terms and up to 4.1% - in annual terms. This is the strongest growth rate (if we talk about annualized terms) since May 2017.

After the disappointing data on the growth of British inflation, this release has allowed to hope for the recovery of the consumer price index, and accordingly - to tighten the rhetoric of members of the Bank of England.

According to general expectations, the English regulator will increase the interest rate by the end of this year - but the final decision on this issue will be made after the completion of the epic with Brexit. Nevertheless, the growth of key macroeconomic indicators is important in the context of monetary policy prospects.

Therefore, data on the UK labor market, which will be published on Tuesday, may provoke an increased volatility for the gbp / usd pair. According to preliminary forecasts, the unemployment rate will remain at the same record low of 4%.

The number of new applications for unemployment benefits will be reduced to 12 thousand (from the previous 20 thousand). f the release comes out at least at the forecast level, this will provide additional support to the pound (unless, of course, the "news from Brussels" is not disappointing).


In terms of technology, the pair has the potential for further correction to the level of 1.2985 (located in the middle line of the Bollinger Bands indicator on the daily chart).

Support levels are located at two elevations - 1.2760 (the bottom line of the Bollinger Bands) and 1.2625 (the lower boundary of the Kumo cloud).

But here, it is worth noting that the news background regarding the prospects of Brexit is capable of "redrawing" the technical picture, especially if the price movement is impulsive.
 

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EUR/USD: the next resistance level is 1.1370

The dollar index goes down, while the euro rises in price for almost all currency pairs: the first trading day of the week continued the trend from Friday, when the EUR/USD pair rebounded from the annual low and restored all lost positions. Today, the downward price dynamics have continued.

The main driving force behind the EUR/USD's price growth is the news background on the prospects for trade relations between the US and China. Let me remind you that this week the parties will resume the negotiation process, which may culminate in the conclusion of a "truce" between the two countries.

To be more precise, the parties can only come to a framework agreement, where only the main positions of the future document will be indicated. This "letter of intent" will form the basis of a future deal, the details of which will be discussed between the leaders of the People's Republic of China and the United States during a personal meeting.

Over the weekend, Donald Trump said that "great progress" had already been made on the issue of concluding a trade deal, and he is optimistic about the prospects for the upcoming talks.

A similar position was voiced by the leader of China Xi Jinping. According to him, the parties managed to achieve significant success in resolving trade disputes.

In unison with their leaders, the negotiations and high-ranking officials, in particular, the US Treasury Secretary, the US Trade Representative, and the Vice-Premier of the State Council of the People's Republic of China, Liu He, appreciated the negotiations.

Such optimism was reflected in market sentiment. The US dollar, which is usually in demand against the backdrop of increasing global problems, began to actively slow down. The dollar index moved away from local highs in the area of 96.9, not finding the strength to test the 97th figure.

And although the decline in this indicator is fairly smooth, the causal link is obvious: the closer Beijing and Washington are to the deal, the weaker the position of dollar bulls.

However, the EUR/USD did not increase only because of this factor. The Brexit theme also concerns traders of the pair, given the approaching deadline. It is worth noting that the news flow regarding the prospects of the "divorce process" does not always affect the pair (unlike the pound, where this topic is in indisputable priority).

The single currency reacts to Brexit news mainly when the parties closely approach the red lines of the negotiation process. This week Theresa May will hold talks with the EU leadership (in particular, with Juncker) and with the leaders of the EU countries.

The central issue is the regime of the Irish border, namely, the mechanism of the backstop, which is the main irritating factor for the majority of British deputies. During the weekend there were rumors that the representatives of France offered Brussels to make some certain concessions on this issue, so that the negotiations would move from a dead point.

Although journalists later denied this information, traders are still optimistic about the future, in the hope of a long-awaited compromise on the backstop issue.

The European currency follows the pound, although at the moment there are no significant reasons for the price increase: there are a lot of rumors around the upcoming talks, which sometimes contradict each other.

In such circumstances, it is impossible to make any clear predictions, so this fundamental factor can not be called reliable. By the way, a UK government spokesman said today that following a European voyage by the prime minister, the Cabinet could change the terms of the deal or even delay Brexit.

This suggests that London doubts that Theresa May will be able to convince her colleagues that the terms of the deal need to be revised. But traders are still inclined to believe optimistic rumors, so both the pound and the euro show a positive trend.

The Bundesbank report published today also provided indirect support to the EUR/USD pair. Recently, news from Germany does not please investors: economists of the German government revised the forecast of GDP growth downwards, and macroeconomic indicators for December and January were released in the "red zone".


The report of the German central bank also acknowledged the slowdown of the main parameters of the national economy. But at the same time, members of the regulators stressed that they did not observe any signs that a slowdown in GDP growth would turn into a decline in the economy.

Such an unexpected conclusion was supported by the European currency, especially against the background of Monday's nearly empty economic calendar. During the European session, the Bundesbank report became the only more or less significant source of news, while the American sites are closed today on the occasion of the celebration of Presidents Day.

Thus, the euro-dollar pair has the potential for further correctional growth: today, the price tested the first resistance level of 1.1340 (the Tenkan-sen line on the daily chart). If the pair bulls overcome this barrier, they will approach a stronger level - 1.1370 (the middle line of the Bollinger Bands on the same timeframe).
 

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AUD/USD. The aussie will go through a busy trading week

The AUD/USD pair shows mixed dynamics this month. In early February, the bears interrupted the price growth and pulled it down by more than 200 points.

However, they failed to overcome the mark of 0.7000, and was followed by a corrective pullback, which subsequently received its continuation. As a result, the pair recovered almost all lost positions and is now trading in the mid-71st figure

This week, the aussie will trade in conditions of increased price turbulence. There are many reasons for this. First, the minutes of the last RBA meeting will be published on Tuesday.

A little later on (Thursday) we will learn the data on the growth of the Australian labor market. The head of the Reserve Bank of Australia Philip Lowe, who will speak in the country's Parliament on Friday, will report to the members of the Standing Committee on Economics of the House of Representatives, can also give impetus to the pair.

The very theme of the presentation suggests a broad assessment of the current situation, so the market will respond to this speech accordingly.

And in the end, the traders of the pair will keep track of the main political theme of the week: we are talking about the next (according to some information – the final) round of talks between Beijing and Washington.

All these fundamental factors will have a significant impact on the dynamics of AUD/USD, so each of them should be discussed in more detail. So, tomorrow we will know the text of the minutes of the last RBA meeting.

Here it is worth recalling that traders actually ignored the results of this meeting. Contrary to pessimistic expectations, the regulator reacted rather restrained to the current economic situation.

So, on the eve of the meeting, many analysts warned that the central bank will significantly reconsider its position on the country's GDP growth this year (up to 2.8% and below), but these fears were not justified: the regulator reduced the forecasts of economic growth to 3% from the previous forecast of 3.5%.

This fact even made it possible for the pair's bulls to claim an increase in price, but after a few days, such intentions were crossed out by the head of the RBA, who voiced too pessimistic comments. He acknowledged the heightening of both external and internal risks.

The trade war between China and the United States could flare up with a new force in spring, pulling the world economy and the commodity market. Ascertaining this fact, Lowe stated that the regulator can react to external circumstances accordingly, and the option of lowering the interest rate cannot be ruled out.

It is worth noting here that earlier in the text of the accompanying statement of the RBA, there was a phrase that "the next action relative to the interest rate will most likely be upwards". Now the reverse option is not excluded.

That is why the minutes of the last meeting of the Australian central bank in this case is quite significant. If the majority of the members of the RBA share the point of view of their "chief", then the aussie will once again fall under a wave of selling.

The dynamics of the labor market can also have a significant impact on the aussie. The unemployment rate should remain at the same five-percent mark, but the increase in the number of employees will decline slightly (relative to the previous month) to 15.2 thousand. The Australian dollar will again be under pressure if the real result is different from the forecast (especially downward).

Here it is necessary to carefully look at the structure of indicators. The fact is that employment growth in December was entirely due to part-time hiring. But full employment, on the contrary, decreased by three thousand, continuing the negative trend.

This factor adversely affects the dynamics of wage growth, since full-time positions offer a higher wage level. If a similar dynamic takes place in January, then even a low level of unemployment will not save the aussie from a pressure of being sold.

Despite the fact that risks of resuming the downward trend is quite high, short positions on the pair should be treated with extreme caution, especially if the price approaches the psychologically important level of 0.7000. This is due to the US-China trade negotiations, the next round of which will be held this week in Washington.

The priority of this fundamental factor for the aussie is unconditional - the Australian economy is too dependent on the Chinese, so any positive signals from the fields of the negotiation process will push the pair up, regardless of the results of macroeconomic reports.

Donald Trump shows unusual optimism about the upcoming dialogue - and if his expectations are met, then the fundamental picture for most currency pairs will change significantly, and above all - for the AUD/USD pair. Because of this factor, you must not forget about the "foot".

Thus, on the approach to the "round" mark of 0.70, there is a strong support level of 0.7030 - at this price point the lower line of the Bollinger Bands coincided with the upper boundary of the Kumo cloud (on the daily chart). But the resistance level is the mark of 0.7280 - this is the upper line of the Bollinger Bands on the same timeframe.
 

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Europe stands in the abyss

On the final day of the previous week, extremely weak data from Europe pulled down world markets, reminding them that the eurozone economy and its leader Germany continues to show a slowdown in economic growth, already indicating a decline.

The business activity index in the manufacturing sector of Germany, published on Friday, fell to 44.7 points against 47.6 points in March against expectations of weak growth to 48.0 points.

In recent years, after the crisis of the end of "zero" only in the summer of 2012, the figure dropped to 43.0 points, not to mention the nearly vertical collapse in the fall of 2008. After reaching a local high last winter, the indicator steadily declined, making attempts at a weak recovery.

A similar picture is observed in the index of business activity in the manufacturing sector of the eurozone. The indicator also showed a fall to 47.6 points in March against the February value of 49.3 points and a forecast of a weak increase to 49.5 points. The indicator, like the German one, moved down last winter.

In fact, the figures presented confirmed our fears that the eurozone economy and, most importantly, Germany are showing strong signs of a recession, which was reflected in the reaction of the markets on Friday.

Investors sold off risky assets. The main European stock indices fell by an average of 2.0%. The US lost about the same amount. Quotes of oil and industrial metals were also under pressure.

Naturally, on this wave of pessimism, defensive assets – government bonds of economically strong countries, among which the leaders were American, gold, and from the safe haven currencies - the Japanese yen, the Swiss franc and the US dollar. The main currency pair fell in the moment on one figure.

Why was there such a strong reaction to local economic data from Europe? And they pointed out that the beginning of the economic recession in Europe is likely to be the catalyst for the start of this process in the United States and could generally result in a severe global crisis, before which the events of 2008-09 will seem like flowers.

If then the ECB had the opportunity to withstand the crisis by lowering interest rates and incentive measures, known as quantitative easing, now it does not have such tools. Interest rates are already near zero and even lower.

Turning on the printing press with a new force will only slow down the process of decomposition, but not eliminate it, which means that an abyss opens up before Europe, from which it will be extremely difficult to break free, which could threaten the collapse of the euro area and even regional military conflicts.

Assessing such prospects, we believe that the single European currency will remain under pressure, if published and more data will confirm our concerns, the risk that the pair would further fall will only increase.
 

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Forecast of the day:

The EURUSD pair is consolidating above 1.1285 after a landslide fall on Friday. It may continue to decline to 1.1215, if today's data coming out of Germany turns out to be weaker than forecasts.

The USDJPY pair found support at 109.25 and may continue to decline to 109.25, both after a rebound to 110.35, and after falling below 109.80, if negative sentiment in the market reappears.



 
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