Finance: Euro Really Rebound OR See Parity

　　 There are 5 reasons why the euro may fall further.

1. Potential Capital flow The strength is very real, indicating that the euro is still under pressure in the medium term.

2. From the recent signals released by the Federal Reserve, the normalization of monetary policy has been on the right track. There is no way to prove that the current market pricing of the US Federal Reserve raising interest rate in June has gone too far.

3. After the European Central Bank opened the European version of QE, the current monetary policy has entered the state of "automatic navigation". That is to say, even if the euro area's economic data improve, the ECB will not reverse its monetary policy in the short term.

4. Technically, the euro has little support at the current price.

5. There has been no extreme speculative intervention in the past three weeks.

　　 There are 4 reasons why the euro may be stagnant or even reversed.

1. The euro's fall looks too fast. Since its use in 1999, the recent fall rate is the highest in 3 months, 6 months and 9 months.

2. The euro may have fallen to the level of willingness to accept the QE when the ECB opened.

3. The market's views on the euro are unanimous. For example, the euro area's fixed income asset investment outflows are negative.

4. Federal Reserve The factors may be instantaneous. There is no obvious evidence that the Fed will change its wording. In fact, the risk is rising.

　　 Conclusion:

We believe that the euro / dollar will fall to 1 or even 0.95 level in the next 1-2 months. Although this is not the official expectation of our bank. But the risk of the euro / dollar rebound to higher levels is also rising, for example, the 1.10-1.12 area.

The first key node is the Federal Reserve resolution this week. Any mention of the wording of the negative impact of the dollar upturn on the US economy will significantly lose the US dollar's action, at least in the short term.

　　 Patience wording spreads panic. Europe / US rebound needs caution

As the euro / dollar low rebounded, the financial market seemed to be in a "patient wording panic" as the Fed announced a new interest rate resolution this week. Although most market participants believe that the Fed will change the wording of the statement, the recent surge in US dollar and low inflation have left investors worried that the Federal Reserve may postpone raising interest rates and cancel the hope of "patience".

The strong job market has led investors to expect the fed to abandon the word "patience" at this meeting. If patience is still there, it means that the Federal Reserve will not raise interest rates at the next two meetings, and if the word is deleted, it will increase the probability of the Federal Reserve raising interest rates in June.

Meanwhile, at the meeting, the Fed released the latest economic forecast, and some investment banks were worried that the Federal Reserve might release some mild signals. The Fed's economic forecast will be announced together with the statement.

Credit Agricole said in its intraday report on Monday (March 16th) that because the recent performance of US inflation was not satisfactory, it did not rule out the Fed's unexpected dovish risk this week in the interest rate resolution. The euro / dollar needs patience before it is short again.

The bank also said, "although the euro is unlikely to face significant upward risk, it needs patience before it shorts the currency." This is mainly due to the fact that the Fed's interest rate resolution this week could lead to a sale of facts. Last week, the euro / dollar reached a 1.06 target level, waiting for a better price to go in again.

　　 Jiasheng group: Euro / dollar But how long can it rebound?

In the new week's North American session, we have seen some struggling currencies recover a little bit of anger, rebounding against the strong dollar. Of course, in the past few months, the dollar has been so strong that there appears to be some sort of falling trend sooner or later. But the question now is how long this counter trend may last. Observing the picture of the US dollar up to now and later this week may be able to predict the future effectively, and fortunately, we have seen some data this morning, which may reveal the US dollar's downfall.

The figures released this morning did not depict the best picture of the US economy; the New York fed manufacturing index, industrial output and NAHB housing price index were not as good as expected, with industrial output even 0.5 percentage points below the revised value. A strange thing has happened recently in US data, which seems to scream for attention; the employment data exceed the most optimistic expectations, while most other reports do not follow. The most notable example is the 0.6% decline in retail sales announced last week, but today's data is also a good example. The New York fed manufacturing index for second consecutive months is not as good as expected, industrial output has been third times continuously, and the NAHB housing price index has been worse than expected for fourth consecutive months.

So, which version should we believe in? Is employment leading to recovery, the version of all other fields, or employment is a series of nonsense, that the dollar will be liquidated? And this is what the Fed will do later this week. The market expects this prestigious body to remove the phrase "patience" in its statement, assuming that this prediction is accurate and may give the US dollar a boost during the period before the Fed's resolution.

No matter which version the reader tends to believe, a currency pair that may not be affected is the euro / dollar. The European Central Bank's quantitative easing plan is fully implemented, so far the euro is negative, and Greece's withdrawal from discussions will not disappear. Therefore, prudence should be expected that the euro's rise may soon disappear. Fortunately, we have such situational settings. The weakening dollar has driven the euro / dollar back to 1.06, where several former resistance levels are gathered. If the euro sentiment is still bearish, the recent rebound may be short-lived, and because resistance is near, it may soon regain its downtrend.