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Weekly Currency market review after 7th October, 2011.

Whenever uncertainties are coming in world financial markets, investors are shifting towards more secured currencies than others, like EURO. As we can see during the beginning and end day of the week there were some bad things in Euro-are and that clearly reflects on the value of EURO.

7th-Oct, 2011

S.African RAND
Brazilian REAL
Mexican PESO

Many of the Asian Central Banks sold dollars to support their local currencies. Most of the Asian currencies advanced this week, look like they are going to quickly cover the lost ground. Somewhere I was reading that Brazilian exporters are selling dollar anticipating future gain. AUD was effected by the decision of  their Central Bank to left interest rate unchanged and gave some signal that they may reduce it as inflation is easing.

Currency Market forecast for coming week


During last few week REAL, PESO & South African RAND were showing same type of movements, currencies of these Emerging nations are following same trend.

Now it is sure that EURO is following the lower high and lower low pattern, which I talked during few weeks. From here if it breaks 1.368 level, it will negate the pattern. 1.36 is a good resistance area for EURO. On the other side there is a chance that it may go below 1.32 level if it follows the pattern.
Last week, I was expecting that AUD will again re-test 0.96. Actually it made a good base here in past. Looking at the last day’s figure, I think it may again test lower levels. Now it is getting resistance at 0.99 area. If it manages to break this, then it may test level up to 1.03 area.
USD broke the 78.50 level but as I said in last week it’s moves were not much except that one day. Now 79.5 will act as a new target for it. If it breaks that convincingly then it can go in higher levels and situation permits that in this moment.
For Swiss FRANC around 0.94 will act as a good resistance, if it breaks that then it can go in higher levels. It’s ultimate resistance is at 0.96 area.  On the downside it has support at 0.90 level.
YEN was flat this week, 77 is acting as a good resistance for it. YEN’s ultimate target is 81 in the upside. I think if Japanese authority takes some steps then it can easily break 77.8 level which I talked in last week. On the downside it’s support is at 76 level.
Brazilian REAL failed to break 1.90 area, now it may test level up to 1.70. It may take some time to test that 1.90 level in the upside. Same thing also goes true for Mexican PESO, as it couldn’t break 14 level now it may test 12.8 level in the downside. For South African RAND, it may test 7.4 level in the downside. It may take time to test 8.50 level.

These downgrades may complicate matters beyond Greece to other problematic countries and that in-turn may effect EURO. Demand for dollar may increase after that rate cut by Fitch ratings and I think in coming days whenever investor will get a cheaper dollar they are going to take long position in it.

[Rise and drop in currency (under heading Currency Market forecast for coming week)  means rise & drop in chart figure, not currency’s rise & drop.]

NOTE :  Please see the disclaimer of this blog .


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