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Currency market review (weekly) after 5th April, 2012.

Spanish bond auction and ECB’s rate decision helped EURO to drop this week, on the contrary as I was expecting in my forecast it is good to see a positive week for USD, after 3 consecutive negative weeks. This week Swiss FRANC broke 1.20 limits for the first time since SNB set it rates against EURO, now it will be interesting to see how SNB reacts in coming days.

Currencies
5th April, 2012
3/30/2011-4/5/2012 (%)
3/23/2011-3/30/2012 (%)




USD
80.076
1.43
-0.49
EURO/USD
1.306
-2.03
0.45
AUD/USD
1.03
-0.39
-1.15
USD/JPY
82.37
0.09
-0.07
USD/RUPEE
51.04
-0.23
0.51
Swiss FRANC
0.92
1.77
-0.55
S.African RAND
7.833
2.18
-0.35
Brazilian REAL
1.823
0.11
0.61
Mexican PESO
12.866
0.48
0.46

As I was expecting in my last week review RBA hold its interest rate but after the report of trade deficit, RBA may think about rate cut in its next meeting at May. AUD is dropping for 3 strait weeks. Asian currencies were in higher side on Chinese manufacturing report but later things were not same.




Currency market forecast for coming week.


Let talk about different currencies for coming week.


Last week I was suspecting that EURO may not continue its last day’s move as finance minister’s meeting was already discounted and it is good to see that it gets support at around 1.30. Now its bearish pattern is more prominent and from here it can easily go at 1.25 level, provided it breaks around 1.30 range. Therefore its long-term pattern which says that EURO will be around 1.15 may become true. Here I must say that EURO is in short-term oversold condition, so things can reverse from here, therefore 1.32–1.33 is the important initial resistance for it. If EURO crosses 1.35 then it may trigger a pattern which can take it towards 1.42. I will think about its upside when EURO crosses 1.36, investors who took short positions may think about covering their positions if Euro goes level above 1.36.

Last week, I was expecting that USD may change its position. As such it got resistance around 80.50 level which I mentioned in my last week’s forecast. Last few days moves were very encouraging which reflects that it can go more. I will be thinking about more up moves when it breaks 80.50 level, if it crosses that then I will talk about 82. After this week moves USD goes into a short-term over-bought condition, which says that it can reverse its position. Therefore important initial support level is at 79 –79.5 range. I think still there is an option that USD may drop below 78 and the triggers the bearish pattern. This negative pattern can take USD around 75 level. So again I want to repeat that 78–82 becomes an important zone for it. I think person who has created long positions, for them 77–77.5 is the important level and for short positions the level is 81.

AUD tested the lower support level of 1.01–1.02, it is in over-sold zone but in spite of that it can easily tests lower levels. Worst case scenario for AUD is now at 0.97 level. Last day’s move was better so there is a chance that it may again test 1.04 level in coming days and if it breaks that then next resistance is at 1.06.
I will be expecting up moves from Japanese YEN in early days of the coming week. But as things are moving in last few weeks, if it chooses that, then it will be flat days in coming week. On the other hand there is a chance that it may test lower levels may be around 81, if it drops from here.

It looks like that Swiss FRANC may not follow lower highs and lower lows pattern in coming days and I think it will be more clear in coming week if it able to cross 0.93 in the upside. In fact if it able to cross 0.93, then there is a chance that it will form a pattern which can take it towards 0.96 level. On the other hand 0.895 is a good support level for it, if FRANC breaks that then it can drop more. But I need more proof that it is coming out from lower highs and lower lows pattern.

Brazilian REAL again not showing any clear trend, this week it was flat. Chart was saying that it could easily go higher levels this week but it did not. Technical indicators are not showing any specific trend so as I said in my last week’s review that it is forming confusing pattern, on one side it can go more higher levels if it able to break 1.88 and on the other hand it is forming a negative pattern where from it can drop in future. Looking at this type of movement I think 1.67–1.88 is the range for REAL,
So, South African RAND is following higher highs and higher lows pattern. It is testing important level of 7.8, last few days move was better but here I will not surprise if it again re-test 7.7 level in coming week. Unless it crosses 8.00, it will be hard to talk about a new trend. On the downside important level is 7.40.




[Currencies are given against US dollar, unless specifically told. Rise and drop in currency (under heading currency forecast for coming week)  means rise & drop in chart figure, not currency’s rise & drop though sometimes it is same in meaning.]

NOTE :  Please see the disclaimer of this blog.

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