Forex Daily Forecast, Analysis and Prediction

The so called “commodity currencies”, the Australian Dollar, the New Zealand Dollar and the Canadian Dollar often move in unison. However, periodically strong trends among them also develop. Such was the case in 2010 when the AUD-CAD cross rallied from 0.8570 to 1.0205.

The Swiss Franc is increasingly getting the media’s attention. Even though it weakened in relation to most other currencies, it is still very close to historical extremes. This in turn, has brought on threatening rhetoric from the Swiss National Bank. Once again, the central bank is voicing its displeasure with the strong CHF, which implies possible intervention.

In spite of good size price swings over the last couple of weeks, the EUR-GBP is still not showing a discernable trend on a long-term chart. This pair is in a process of building a huge symmetrical triangle, under development for over two years now.

The currencies of Australia and New Zealand have had a very interesting relationship lately. In the later part of 2010, the AUD-NZD rallied almost 900 pips, only to be followed by an over 600 pips sell off. These are large moves for this pair, especially considering that they happened during an only three months time span.

The Australian Dollar appears to be no longer the dominant currency from just couple of weeks ago. It has retreated from the all time high against the US Dollar and slipped in relation to most other active currencies. The AUD-JPY pair is no exception.

The ever-popular “cable” as the GBP-USD, is typically one of the more volatile currency pairs available for trading. With its strong moves and sudden turns, it provides plenty of trading opportunities, on both short and long-term time frames.

Last week the Euro-British Pound pair sold off dramatically. It fell about 365 pips, which is extreme, especially in the light of the most recent market activity. In fact, the plunge from 0.8646 to as low as 0.8281 created the largest weekly trading range in many months.

A combination of a very strong Swiss Franc and an extremely weak Euro made for a very powerful trend in the EUR-CHF currency pair. It has been moving down for months, making new all time lows along the way – seemingly one after another. The latest all time price extreme was 1.2399, established just two weeks ago.

The Australian Dollar had a strong run in the last days of 2010. While the rally was broad and against many currencies, the AUD-USD received the most attention. And for a good reason – this pair made another all time high, reaching 1.0255.

The Canadian Dollar was getting stronger for the better part of 2010. In the later part of the year, the USD-CAD found a firm support at the parity level. This level held for a few months, but was eventually broken on 12.31. and the price fell to 0.9887.

When the Australian Dollar was reaching the all time high against the US Dollar, it was also getting much stronger in relation to other currencies. Some of them moved to all time extremes, too. The EUR-AUD cross made the new record low several times, eventually falling to 1.2925 in late December.

During the last several days, the GBP-USD showed an increased intraday volatility. The popular “cable” had daily ranges averaging 200 pips, with the largest one of almost 300 pips, which took place on the last trading day of 2010.

The USD-JPY surprised many trades during the second part of December. Just at seemed that the price would challenge the post intervention high of 85.60, this pair changed direction. It sold off, falling from 84.50 to 80.90 in a span of about 2 weeks.

Currencies are known as some of the best trending financial instruments. This means, that major trends, once established, have tendencies to last for a long time. Unfortunately, this characteristic of Forex was not visible in the second half of 2010. Most of the currency pairs showed indecision, especially on longer-term charts.

EURUSD was very strong yesterday but so far it remains in the broad 1.3070 - 1.3270 range. And since it is near the upper limit of this range, the odds favor a pullback from here.