Weekly FX Forecast- April 9, 2012

By: Christopher Lewis

EUR/USD

EUR/USD had a horrible weak for the bulls. The five sessions saw the pair fall precipitously, and the comments by Mario Draghi during the European Central Bank press conference were extremely dovish as he spoke of economic difficulties ahead for that region. The pair also has been reacting to the lack of apparent desire to implement quantitative easing again. The Federal Reserve hasn’t ruled out the possibility, but it is looking less and less likely. The minutes released this previous week certainly threw a lot of cold water on the bulls and their arguments for a higher pair.

However, the Non-Farm Payroll numbers on Friday were under consensus, and because of this there was a slight reprieve for the pair. It should be noted that the bounce was stopped at the first sign of resistance in the form of the 1.31 handle. Because of this, the pair looks like a “sell the rallies” type of market still.

AUD/USD

The AUD/USD pair had a couple of positive days at the end of the week, bouncing from the 50% Fibonacci retracement level. The 200 day EMA is above though, and the descending channel is certainly something that bulls will have to worry about. There are a lot of minor support levels below, so any fall will be difficult. There is a whole slew of economic numbers coming out of China this coming week, so this pair will more than likely be volatile.

The top of the channel needs to be broken in order for me to be comfortable going long of this pair though. This market is one that I am bullish on long-term, but at the moment patience certainly could be the difference between profit and loss. Selling isn’t’ a thought to me until the parity level below is broken to the downside.

USD/CAD

The USD/CAD pair has been a delight for scalpers lately, and this previous week has done nothing to change that. I believe that this pair will continue to bounce around between the parity and 0.99 levels for a while, as this pair tends to grind for long periods of time every once in a while. A break of 1.01 would be bullish and I would be long. However, the 0.98 level below needs to be broken to the downside in order for me to sell. However, selling at parity is profitable for the time being as long as you are willing to get out after 50 to 70 pips profit.

USD/JPY

The Japanese Yen has been slowly grinding lower over the last couple of weeks, and the poor numbers for the Non-Farm Payroll release on Friday pushed prices lower. However, the 0.8150 level is the start of a large cluster of support down to the 80 level. This is why I am currently looking for supportive candles in which to buy this pair as I believe the long-term direction is up.