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Currency market review (weekly) after 27th January, 2012.


Lower interest rate is not the only reason for USD’s drop this week, I think speculation about QE-3 and lower yields of bonds for countries like Italy also contributed in it. This week EURO strengthened for 5th day against US dollar and for 2 weeks in a row.


Currencies
27th Jan, 2012
1/20/2011-1/27/2012 (%)
1/13/2011-1/20/2012 (%)




USD
78.9
-1.65
-1.52
EURO/USD
1.322
2.24
1.97
AUD/USD
1.066
1.72
1.55
USD/JPY
76.735
-0.49
0.18
USD/RUPEE
49.64
-1.37
-2.14
Swiss FRANC
0.919
-1.61
-2.19
S.African RAND
7.751
-2.49
-2.18
Brazilian REAL
1.743
-1.13
-1.73
Mexican PESO
12.907
-2.05
-3.05

AUD is facing 6 positive weeks in a row. Swiss FRANC is getting weaker against the Euro; I read somewhere that some are expecting action from Swiss national Bank in coming days.

Better employment report helped Brazilian REAL to rise this week, expectations were also high in Brazil that central bank may cut the borrowing cost. Asian currencies rose for 4th week, many Asian central banks are taking steps to control the rates. These Emerging nations are expecting a flow of investment after rate cut decision of US Fed.


Currency market forecast for coming week.

EURO tested exactly that 1.32 resistance level which I said in last week. Now 1.38 is important resistance level for it but before that it has to break 1.34. If things remain same or better then it can test higher levels. That 1.15 level is still on but if things improve this way then it may not test that level. I things coming days will decide all things.

AUD is getting some resistance at around 1.07 level. Chart pattern is saying that it may go more in the upside but gradually it is also getting in overbought position. I am still holding my earlier view that it will break 1.07-1.08 level and go more in the upside. In the downside it has good support at 1.02 level, but as I said in past that unless it breaks 0.96 I am positive about up move.
USD’s drop was quite expected as I said in last week. Now if USD continues with its drop then it can test 78 and then 76.5 level. I think there is a chance of reversal; therefore it may test level above 80.50.
Japanese YEN again tried to break 78 level but later it could not carry that move. Now unless it comes out from 76-78 level I do not expect any new trend from it. Same thing is true also for Swiss FRANC, unless it comes out from 0.92-0.96 it is hard to predict any move. It is in oversold zone in spite of that not much movement is coming.

Brazilian REAL is getting support at 1.74 level, which I said in last week. I am still holding my view that unless it breaks around 1.673 levels I am positive that it will test 1.90 level. It has immediate resistance at 1.80-1.82 levels.
7.7 is still acting as good support for South African RAND. Indicators are saying that it is in oversold zone so some reversal may happen in coming days. Therefore it has a resistance at 8.10-8.20 level.




[Rise and drop in currency (under heading currency 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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