Last week we can underline two significant economic events. The first was that the National Bank of Switzerland decided to setup a fixed exchange rate for EUR/CHF to 1.200. In the result, the EUR/CHF pair jumped from 1.100 to 1.210 and the CHF/USD pair jumped from 0.785 to 0.860. The EUR/USD pair brought us the second event; it broke the bottom channel level at 1.400 and went down to 1.364. This event opened the possibility for downward movement to the level of 1.345. If this level is passed the pair will move to 1.300. An alternative scenario will be the jump from level 1.345 (or some new resistance level in range 1.364 – 1.345) back to level 1.400 and, if this level is passed then it will go to the top border of the channel (1.455). Presumably, the pair EUR/USD will be horizontal or a little bearish between 1.345 and 1.400 because this week didn’t plan any important economic events. But if there is any bad economic news (not only from Europe) the pair will continue its’ sharply downward movement that it started last Thursday. Another critical event can come in from US. If the market receives any information about the start of QE3, the US dollar will be under strong pressure and ERU/USD will jump to at least 1.455.
During last week, the oil price has continued to move inside the low-bearish correction channel, created in the end of August. It moved from the bottom border (83.28) to the top (90.28) and back to middle (86.91).
In the current situation, it will be very difficult to guess its’ future direction, but if we will look at the “oil depended” currencies (AUD, NZD), we will see a very interesting picture. Both currencies have finished building the “head-shoulders” figure on the day chart and it looks like the shoulders line is already broken. It opens up the possibility for a continuing downwards movement. But you need to be very carefully with stop losses – any news about the QE3 can send the US dollar down against all currencies.
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