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UFXBank Forex Outlook: Dollar Down, But Not Out

Written by UFXBank Research Team
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USD Dollar (USD) – Friday saw the dollar losing momentum to reach another 10 month low, yet toward the end of the trading day, the dollar strengthened.  Most of the volatility was seen during Bernanke’s speech, where he hinted towards interest rates not moving and the need for additional stimulus. Other then Bernanke’s speech about the new quantitative easing program, core CPI came out at 0% vs. an expected 0.10%. Core retail sales came out as expected at 0.40%. The fed budget balance came out at -34.50B vs. an expected -32.00B. The stock markets closed with the DOW JONES losing -0.29% and the NASDAQ moving up by 1.37%. Crude oil decreased by 1.7%, closing at $81.25 a barrel. Gold (XAU) declined slightly by -0.4%, closing at $1372 an ounce. Today, the TIC Long-Term Purchases is expected to be released at 47.5B vs. 61.2B previously, and the Industrial Production expectations will also be released and is not expected to change from the previous results of 0.2%.

Euro (EUR) – Although Friday saw the euro strengthen against the dollar to break a 10 month high in Forex trading and reach 1.4156, the pair lost momentum and fell sharply during the American session. The CPI results were of no change, remaining as expected at 1%. The Asian session last night saw the Euro continue to weaken against the major currencies. As long as the EUR/USD is above 1.3890, the trend is still bullish. We may witness a slight correction based on overbought conditions, and a bearish tone may settle in if the market breaks Friday’s low of 1.3935. Overall, EUR/USD traded with a low of 1.3861 and with a high of 1.3895. There is no economic data expected today.

EUR/USD – Last: 1.3885

Resistance

1.3950 

1.4020 

1.4120 

Support

1.3860 

1.3780 

British Pound (GBP) – The Pound continued to rise against the Dollar to break the much tested 1.6060. The American session saw the Pound lose ground and return to 1.6000 zone. The GBP/USD on the daily chart is still above its moving average, and if the pair breaks 1.5970, it might push the pair lower to the 1.59 zone. The pair reached a low of 1.5914 and a high of 1.5949. Today, no economic data is expected.

GBP/USD - Last: 1. 5949

Resistance

1.6020 

1.6060 

Support

1.5920 

1.5770 

Japanese Yen (JPY) – Friday saw the Yen strengthen dramatically against the Dollar to return to its 15 year low of 80.86.  The American session saw the yen weaken to levels of 81.35. Last night saw the Yen strengthen slightly. The momentum on the pair is still bearish as long as the USD/JPY remains below 81.50. Overall, USD/JPY traded with a low of 81.13 and with a high of 81.40. Today, no economic data is expected.


USD/JPY-Last: 81.20

Resistance

81.50 

81.70 

Support

81.20 

80.80 

Canadian dollar (CAD) – The Canadian Dollar strengthened versus the Dollar advancing 150 pips from parity. Friday’s announcement of Manufacturing Sales was much higher than expected and came out at 2% vs.0.5%. The momentum of the USD/CAD seems to be positive as long as the pair remains above 1.0080. Overall, USD/CAD traded with a low of 1.001 and with a high of 1.095.Today, no economic data is expected.

USD/CAD - Last: 1.0049

Resistance

1.0180

1.0220

Support

1.0080

1.0020