Forex Analytics

Review of the foreign exchange market 14.03.08
USD
American currency continues to incur losses against other currencies. The uncertainty of the American economy and inactivity of the USA monetary authorities leads to the fact that the weak dollar is threatening the economy of many countries, especially those in the Persian Gulf where currency exchange rates attached to the dollar.
The American economy will go through this recession, but the dollar will never be able to become such a popular currency which it became after World War II. Moreover, against the background of high inflation in countries which exchange rates are attached to the dollar, the monetary authorities are seriously considering the possibility of the attaching rate to the basket of currencies, in which USD will not have the dominant value.
Such a step would make the dollar more vulnerable and “green papers” scattered around the world could not remain necessary for anybody… and then massive selling of USD by all countries is not excluded so that it would hurt the American economy.
Regarding the current economic situation, it is worth to note that USD continues to decline, and the rate of decline is increasing. Such a scenario will inevitably lead to the development of inflation growth due to increase in energy prices and import costs. After the mortgage crisis it will be more difficult to get loans for business development because the banks will increase the minimum requirements, and increased inflation will force them to raise interest rates.
Among the positive points it is worth to mention that for domestic production in the United States it will be easier to compete with imports and that will promote the growth of the economy.
Today will bring us new statistics on inflationary data for February, and consumer sentiment index for March will be published. Indicators will be taken into account by the market.


the source of info: http://blog.poltekfx.com

EUR
EUR is being traded in expectation of statistics on the consumer price index - Final HICP. In conditions of increased inflationary pressure the main priority of the EU monetary authorities is the struggle with secondary effects of inflation. Against the backdrop of the high cost of oil and food it is difficult to keep inflation within the limits of allowable values, but the strengthening of currency partially solves this problem.
Before the opening of European trading session EUR/USD was in the region of 1.56. Recently, the price is steadily strengthening, and the lack of history at current levels makes technical analysis virtually helpless in predicting the point of turnout. The immediate support for the pair is at 1.53. Stronger support is situated at 1.5150. Intermediate resistance is at 1.5650. The strongest level is likely to be at 1.6, however, it is unlikely that the price will be able to reach it.

the source of info: http://blog.poltekfx.com

GOLD
Yesterday gold set a new maximum. Increased cost of the metal caused by the decline of USD in which gold is actually quoted. Against the background of declining dollar, many investors have moved some of their capital to commodity market, and that is supporting this sector.
Prior to the opening session of the European price closely approached the psychological resistance level of $ 1000 per troy ounce, but this level of testing did not. In the condition of large speculative capital it is not recommended to open positions before correction.
At present, a strong level of support is at around $ 940 (50% of the uptrend, see chart). Intermediate support is at around $ 973 per troy ounce, but in the condition of great position fixing this level can be broken.

the source of info: http://blog.poltekfx.com