The EURUSD is struggling at the all-time high. The market may be content with trading sideways-to-lower for most of the week ahead of the U.S. Unemployment number on Friday. Comments from the ECB remain hawkish as inflation numbers from the Euro Zone do not support an interest rate cut at this time. The USD seems to have stabilized despite poor economic reports last week.
The main trend is up in the EURUSD. The pair closed in a position to take out the old all-time high at 1.5904. On the downside, look for weakness to develop on a trade through 1.534.
The Swiss government cut its economic forecast for next year citing the U.S. housing recession and lower exports. The forecast was written with a very cautious tone as the Swiss wait for some kind of confirmation that the U.S. economy is ready to turn up. A rally in the stock markets is likely to trigger further upside action in the USDCHF, as traders will sell Swiss to buy the Dollar.
The USDCHF main trend is down on the weekly chart, but the reversal bottom at .9647 from the week ending 3/21 is still providing some support. A retracement zone has been tested at .9880, but no significant buying emerged. Holding this price level is the key for counter-trend buyers. If new buying triggers a short covering rally, look for a target of 1.038. A failure to hold .9880 indicates a test of the all-time low is likely.
The Japanese Yen finished the quarter with its biggest gain since September 1999. With the Swiss Franc, the Yen advanced the most against the Dollar in the quarter. A strong stock market is likely to trigger a rally in the USDJPY, as traders will need to sell Yen to put Dollars into the equities. The weekly trend in the USDJPY is down, but the weekly reversal bottom at 95.72 is still intact. The slight follow-through rally last week indicates some developing strength, but the inability to continue the rally indicates the shorts still control the trade. Look for a test of 98.37 â€“ 97.75 to provide support. Counter-trend buyers may come in at this zone. A breakout rally will target 102.15.
UK housing prices dropped for a sixth month in March. Perceptions are that the worldwide credit squeeze is hurting the economy. Traders are betting on an interest rate cut next week. UK financial markets are forecasting a prolonged period of slower growth. The GBPUSD closed sharply lower on Monday and is now in a position to challenge the recent bottom at 1.973.
The Canadian Dollar posted its biggest quarterly loss against the USD in more than a year. The slowdown in the U.S. economy is expected to hurt the Canadian, as the U.S is Canadaâ€™s largest export market. The developing top in the commodities market is also likely to help rally the Dollar against the Loonie. Although GDP was up in Canada, the slowdown in exports is likely to trigger a rate cut by the Bank of Canada.
In the USDCAD, the weekly main trend is up, but the pair remained range bound. The higher close indicates more upside to follow. The market has to trade through 1.038 to trigger a strong breakout. Look for the USD to challenge a new high for the year.
The NZD fell sharply after a report showed that business confidence dropped to a 17-year low in March. There is now a threat that the developing weak economy will force the Reserve Bank of New Zealand to lower interest rates. The slow down in growth is bearish for the NZDUSD.
The main trend is up, but the NZDUSD found strong resistance in a retracement zone at .8040 - .8081. Watch for weakness, and wait for a retracement to .7799 for the next buying opportunity.
The Aussie Dollar fell in sympathy with the New Zealand Kiwi while also receiving downside pressure from a dramatic drop in the commodity markets, especially gold.
The AUDUSD is struggling at a retracement zone at .9211 - .9272. Key support comes in at .9004. This pair has to clear out .9272 to trigger a re-test of the all-time high at .9496. Stay away from the long side if the gold market continues to get crushed. Value buyers may surface around .9004.
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