Weekly FX Forecast April 16, 2012

By: Christopher Lewis

EUR/USD

The EUR/USD pair attempted to rally for the week, but fell short as it sold off on Friday. The Euro weakness continued as the Spanish government struggles to sell bonds at a reasonable rate yet again. However, the 1.30 level is sitting just below, and the shooting star that the pair formed for the week does indeed suggest that we are going to try and break this pair down. I am selling rallies on the first sign of weakness, and a daily close sub-1.30 has me short as well.

AUD/USD

The Aussie had a positive week over the last five sessions, as it bounced off of the 50% Fibonacci retracement level. The pair has been bullish for some time and there are concerns in China about a slowdown at this point – essentially undermining this currency. However, the “slowdown” is an 8.1% GDP in China, so they will still be buying Aussie commodities. Because of this and the bounce from the 50% level, I am bullish of this pair on a break of this week’s highs.

USD/JPY

The USD/JPY pair is one that I have been following with great interest, mainly because I believe that the trend is in the middle of changing. The pair has recently fallen, but the move has been nothing but a pullback in my eyes. In fact, we are approaching the 80 handle, and this area is one that I think could be a great place to get involved.

If the 80 level holds as support, it should be noted that the area was the site of the major breakout, and could be a simple matter of breakout and retest – a classic technical analysis move. Also, the 50% Fibonacci level is just above at the same level as well. Because of this, I am ready to buy any signs of support in that area. I also think it could be a longer-term buy and hold trade if we get past 85.

GBP/USD

The GBP/USD pair tried to rally this past week, but much like the Euro found it wanting. The 1.60 level has held as resistance again, and the 1.58 level keeps this pair up. The area is well-defined, and I am willing to short this pair if we get a daily close south of 1.58, and am willing to buy on a close above the highs from the previous week, at roughly the 1.6060 level.