- The USD index has been propelled higher by an extraordinary repatriation bid. While market
expects a retracement before year-end, the initial signs of a turnaround are not yet evident.
The next major level of resistance is seen at 89.73, the 38.2% retracement of the decline
from January 2002 to March 2008. - Similarly, EUR/USD has revisited territory not seen in two years, and significant support is not seen until 1.2130, the 50.0% retracement of the rally from October 2000 to July 2008. However, the pair is expected to end 2009 around 1.3800, as the dollar’s repatriation bid fades and its pattern of year-end seasonal weakness re-emerges.
- EUR/GBP posted new record highs last week as the market focused on the extreme weakness of the UK economy. Indeed, the first reading of 3Q 08 GDP revealed a greater than expected decline of -0.5% qoq. Market looks for the pair to reach 0.8400 in 1H 09 as the BoE is forced to ease aggressively.
- USD/JPY appears to have been weighed on by the hedging activities of Japanese institutional investors who seem to have been heavy yen buyers on the crosses. The pair has now traded below its March 2008 low and from a technical point of view the next major level of support is not seen until 79.75, the April 1995 low.
Currency Strategy - October 26 2008
October 26th, 2008 · No Comments
Tags: FOREX Strategies
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