EURUSD got stuck in band of 1.15 - 1.17.

2018.9.16
EURUSD
Closed at 1.1667 (-0.07%) Target to 1.1700 (+0.28%)
Indices
10y US T-Note 2.9959% (+0.0258%)
10y German G-Bund 0.450% (+0.028%)
S&P500 2,904.98 (+0.03%)
EUROSTOXX50 3,344.63 (+0.33%)
Dollar Index 94.927 (+0.43%)

1. Dollar Index couldn’t pass over wall of 97. Dollar Index which I expected to go beyond 96, couldn’t pass over 97, and plummeted to 94s again. Although the index ended with +0.43% at this Friday, there is a high possibility of just being temporary for this increase considering limited impact from the trade issue. Although real economic situation of the US will be winning that of Europe continuously, this strength couldn’t be connected to the currency. Market participants are focusing on change of ECB’s policy more than proceeding contraction of balance sheet and rate-rising of Federal Reserves.

2. But European turmoil is stopping additional rally of its currency. EURUSD couldn’t arrive safely in 1.17s. Even though market participants are focusing on the change, there are still other fundamental problems like slumped European stock market, disorder in regional FI market or the proceeding issue of the century: Brexit. Those problems couldn’t be solved easily. In this point, the biggest problem is the stock market. Even though the market has attractive valuation and the greatest dividends, the market participants are not caring about the factors. In perspective of valuation, Japanese market looks like much more attractive than the European market. During this year, NIKKEI225 is at +1.45% and EUROSTOXX50 is at -4.55% in this point. The Japanese market doesn’t have the problems which European market has like political turmoil, struggling banking sector or dramatic change of central bank’s policy.

3. The forces for two sides have equal power against each other, and the situation will be leading to the halt of the currency. The movements couldn’t overpower each other easily, and this would be last for a few weeks. Based on the factors, my target of EUR is 1.17.

Mr. Banker, http://markety.tistory.com