Forex Metal Weekly Newsletter

Weekly review for 17 – 21. 10, 2011

Last week the US dollar weakened against most of its competitors.

In the beginning of the week the decline in the stock market indices supported the US Dollar on Monday. The euro fell against the Japanese yen and US dollar during the Asian trading session (minimum of $1.3822 during this session). Much of this negative rally was caused by the profit fixation of the long positions. The Euro continued falling down through all European session as well ($1.3739 lows) because the investors and traders were not encouraged by the results of the G20 summit, which ended in Paris during the weekend. None of the specific measures to resolve the current crisis have been proposed at this summit. The pound dropped against the dollar and the yen amid existing fears that additional incentives of the Bank of England would not be enough to revive economic growth. The GBP/USD pair has shown minimums in area of $1.5730 during the European trading session.

The yen strengthened slightly against the US Dollar on Monday against the background of the situation in the EU. During the Asian trading session the USD/JPY pair showed its daily high in the area of Y77.45, but later during the European trading session the pair dropped steeply and set the low of this day at Y76.595 level.

During the second part of the day on Monday commodity currencies (Canadian, New Zealand and Australian dollars) updated daily minimums against the United States dollar. The British pound fell for the first time in four days against the dollar after Ernst & Young agency reduced the growth forecast for the UK.

On Tuesday the euro managed to grow against the US dollar and the Japanese yen. At the same time, speculations regarding possible credit rating reduction of France pressured the euro on Tuesday. As a result, the EUR/USD pair showed minimums in the range of  $1,3657. The euro managed to rehabilitate after the announcement of the German Chancellor Angela Merkel. She stated that the European leaders’ Summit, planned for October 23-d, could offer the support plan for the European union.  As demand for the high-risk assets increased, the Australian, New-Zealand and Canadian dollars grew.

During the Asian and European trading sessions on Wednesday the euro strengthened against the background of publication of the report regarding the fact that France and Germany have agreed to increase European financial stability Fund up to 2 trillion euros. As a result, the EUR/USD pair showed its daily maximum at around $1.3868 but then retreated. The dollar stepped back against its competitors amid the falling demand for safe haven assets due to the strengthening of the major stock markets in Europe and Asia and the futures growth on major U.S. stock indices.

The pound briefly fell against major currencies after the publication of the protocol of the last meeting of the Bank of England, the GBP/USD pair set its daily lows at $1.5709. The sterling was pressured due to the fact that monetary policy committee members were unanimous in voting for the increase in QE at 75 billion Stg. However, the GBP/USD pair grew on Wednesday to the area of $1.5746.

Euro decreased to $1.3731 when lawmakers rejected direct guarantees to EFSF fund. Gold fell on the same day amid reports that France and Germany were close to agreement on increasing the size of EFSF 2 ??trillion euros, which resulted in lower demand for gold as a way to protect capital.

During the Asian trading session on Thursday the euro continued its yesterday’s negative rally to the $1.3675 area. The disagreements between France and Germany regarding the concept of the European financial help fund increase pressured the euro. However, during the European session the euro rose against major currencies due to the growing optimism about a possible resolution of the situation with the debt crisis in Europe. The EUR/USD pair rose above the $1.3830 area and set its daily high at $1.3841 level.

The published UK retail sales report which surprisingly grew by 0.6% in September, against the forecasted decrease of -0,1%. The GBP/USD pair strengthened in a region of $1.5803.

Against the background of increased demand for the currency with the status “safe haven”, the Swiss Franc revealed its maximum growth against most of major currencies on Thursday. In particular, the Swiss Frank grew for the first time in three days against the euro, showing an increase of 1%.

Dollar showed increase against the yen for the first time in four days, since the Philadelphia production index grew more than it was expected.

By the end of the week the EUR/USD pair traded at the $1.39 level, the GBP/USD grew and reached the end of the week at the $1.5960 mark.


Weekly technical analysis for 24 – 28. 10

The pair has risen to Moving Average (100) 1.38517 and trying to rise to Fibonacci 23% at 1.42036.

Resistance:  1.41130, 1.44835, 1.47697

Support: 1.37441, 1.33427, 1.28800


The pair is aiming to Moving Average (100) at 1.59962.

Resistance:  1.59962, 1.64274, 1.68504

Support:  1.52523, 1.48532, 1.43344


The pair is trading between two Fibonacci levels of 50% 0.93264  and 38% 0.88022. If the pair breaks 0.88022 the pair may decline to 0.82723.

Resistance:  0.91074, 0.93264, 0.96597

Support: 0.88022, 0.85633, 0.82723


The pair has declined to support level at 76.535 and if the pair stays below this level the pair will decline to 73.126.

Resistance:  80.244, 83.330, 86.836

Support:  76.535, 73.126, 69,117


The pair’s resistance is 1.03847 if the pair breaks this level the pair will rise to 1.05810.

Resistance:  1.03847, 1.05810, 1.07806

Support:  1.01873, 1.00031, 0.97889