Forecast for the week 7.05.2012 – 11.04.2012

The main event of the week, in the period from May 7th to May 11th, that will be able to create a significant impact on the positions of the U.S. currency, will be the data on the production inflation, scheduled for publication on May 11th. However, their significance will weaken again after the reports publication on the key macroeconomic statistics from the U.S., published earlier this month and formed a rather contradictory situation. On one hand, the Business Optimism Indexes suggest that the growth of world’s largest economy continues and even slightly strengthens, but on the other hand, the labor market has been disappointing for two consecutive months. Considering this situation, speculations about the possible necessity for early tightening of monetary policy by the U.S. Federal Reserve will once again weaken, reducing the need to carefully monitor the data on the inflation.

The dynamics of the EUR/USD pair will be largely determined by the investors’ sentiments related to the U.S. dollar. No events that can have a significant impact on its prospects from the European currency are planned for this period. From the standpoint of technical analysis, one needs to mark out two important levels in the areas of 1.3280 and 1.3000, the breaking of which can serve as signals to the formation of directed pulses towards 1.3480 or 1.2600. However, this requires additional fundamental assumptions. Most likely the pair will continue to fluctuate in the range of 1.3000-1.3280.

The British pound, supported by the possibility of an early collapse of the quantitative easing program by the Bank of England, continues to put pressure on the Dollar. Last week, the GBP/USD pair reached maximums in the area of 1.6300, but its traditionally high level of correlation with the EUR/USD pair and the weakening of European currency restrain its growth opportunities. On Thursday, May 10th, the British regulator will announce the results of its regular meeting at which it will be possible to implement changes to the quantitative easing program. In this case, the GBP/USD pair will continue to feel more confident in comparison to the Euro and to put pressure on it in the cross-rate of the EUR/GBP, while the dynamics of the GBP/USD will be largely determined by the behavior of the Dollar.

The Australian dollar has suspended its decline against the U.S. dollar, having found the support in the area of 1.0255 last week, but a more significant than expected reduction in interest rates put additional pressure on its position. In the upcoming week, the most significant event will be the publication of the data on the labor market in the night from Wednesday to Thursday (May 9th -10th). After breaking the 1.0245 support, the target for the movement will become the mark of 1.0130. Its New Zealand colleague, in the absence of important news, will continue to reach for the Australian currency and have all chances to touch the mark of 0.7845.

The dynamics of the USD/JPY pair will be largely determined by the movement of the Dollar, as no significant events on the Japanese side are planned in this period. From the standpoint of technical analysis, breaking the levels of 79.65 and 80.70 can trigger pulses towards 79.15 and 81.70 respectively.

 

Have a successful trading!

The Megadroid team

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