The European currency reverted declines rising to 1.09 after the Asian selloff, as clear paths of action are missing and investors want to hear some guidelines today in the Draghi speech. Obviously, the 1.09 level is the starting point for a large-scale decline or, most likely, a sustained growth, as the ECB has long been expected to recognize that the economic recovery in the eurozone. The political risks have been subdued and the tapering of the economic support is a reasonable reaction to the changes. The US equity bulls still manage to duck out the trap, as the stock markets remain at record highs and the VIX volatility index fell below the 10-point mark, the first time since 1993.
The decreasing premiums like the S&P 500 suggest that there is nothing to fear, and the falling demand for hedging is showcased by defensive assets as the Japanese Yen, the Swiss Franc and Gold. The USD/JPY is fighting for level 114 for a second day, testing the area during the American trades and staging a pullback on Wednesday. USD/CHF finds footing near the parity, staging a brisk breakthrough of the one-month resistance at 1.01.
The optimism of the Dollar bulls dried up at the level of 99.50, where some participants decided to pare longs sending the futures of the American currency to minor declines. The British Pound and the Euro edged up against the dollar, with the degree of buoyancy probably increasing with Draghi’s comments on the economic progress and the Bank of England’s interest rate decision and Mark Carney’s press conference this Thursday. As expected, the British Central Bank will refrain from any changes in the monetary policy, but it will be useful for investors to learn that the Brexit is still a significant deterrent for the BoE to carry out policy shifts.