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Some damping of the geopolitical struggle, which the US ballooned in the person of its leader D. Trump, had a beneficial effect on the demand for risky assets. The stock market in America continued to grow, though not by leaps and bounds. The weakening of the dollar stopped and the increase in the euro turned out to be short.
It is not possible to say that everything has calmed down from the geopolitical point of view. It is most likely that a new aggravation awaits us and the epicenter of these events will be Iran. In the meantime, because of the lack of news on this topic, it seems that the markets will closely monitor the incoming economic data. Today, the focus will be on publishing data on GDP in Germany and the euro area, as well as a large volume of economic data from the UK. And, of course, the figures for retail sales and their volumes in the States will also be important.
Data on the GDP of the Fed and the euro area will allow investors to understand whether it is really worth waiting for the end of the ECB stimulus measures in September of this year or not. It can be said with a high degree of certainty that a slowdown in euro zone economic growth will make the ECB not so confidently discuss the issue of stopping stimulus measures, which means that the euro will not have much support to try to continue to grow further.
On Monday, the euro gained momentum on the wave of an interview with Francois Villeroy de Galhau, the head of the Central Bank of France, who told MarketWatch that he thinks the slowdown in inflationary pressure in the eurozone is "temporary" and he is waiting for its resumption. He expressed the opinion that the ECB will not postpone the termination of the euro zone's stimulus program for a long time. However, this private opinion is from one of the members of the ECB and nothing more. On Monday, this statement was enough only for a weak attempt for the euro to grow against the US dollar. At the same time, the loss of news related to geopolitics provided support to the dollar, which, during the presidency of D. Trump, reacts negatively to its aggravation.
As for the data from the UK, in our opinion, they can only bring temporary support to their sterling for their probable positive, for which the Brexit's unresolved issues, the inhibition of economic growth, and inflation continue to be the main problems. At the same time, data on retail sales from the US may push the dollar up, although, again, this probable growth is likely to be limited.
To summarize, we note that we do not expect significant changes in world currency markets today.
Forecast of the day:
The EURUSD pair, after the correction, is trading above the level of 1.1910. If it overcomes it, then there is a possibility of continuing the decline to 1.1840. However, if this does not happen, then it can again make an attempt to recover to 1.2000.
The USDJPY pair continues to consolidate with a slight increase on the wave of lower geopolitical tensions. It can rush to the level of 110.50 after a breakthrough at the 110.00 level. If this does not happen, then the price can be adjusted to 109.50.
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