Forex Investment and Currency Trading

EUR/USD expected to fall to 1.20/1.25 in the first half of 2009, while GBP/USD is expected to test 1.40. The ECB and the BoE will cut rates further, with the ECB having the most work to do.
Both EUR and GBP will strengthen against the USD in 2009 H2 but neither currency is likely to re-visit its highs against the USD from earlier this year. Look to sell EUR/ GBP in Q2 of next year, as GBP should benefit more from global reflation and lower risk aversion across global markets.

FX Strategy - Sell EUR/USD to open the new year, looking for a move [...]

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Euro zone policy makers have given off conflicting signals in recent months over the ongoing strength of the EUR. To be sure, there are justifiable reasons for concern. Versus major currencies the trade-weighted EUR (Bank of England index) soared in the last 6 months to levels not reached since
the early 1980s, a period when, one could argue, the Euro zone economies were more competitive, with a more modern capital stock and less competition from global producers. And not only has the EUR been strong relative to major currencies, but the EUR (XEU prior to 1999) remains near its record high [...]

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The USD Index rallied about 1% last week as expectations for Fed easing have stabilized and the employment decline was not as large as expected. While the Fed want to end the easing process, expectations for tightening before yearend remain excessive. While the USD has probably bottomed, further gains in the near term remain unlikely, and market continues to expect the downside USD adjustment will increasingly shift toward Asian currencies.
Weaker Euro zone economic reports have taken the trade-weighted EUR down about 2% from its April 22 cycle high. While the economic momentum in 2Q 2008 is clearly softer, it will [...]

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USD/CAD – Support at 0.9940 and 0.9724 is expected to attract buying interest for a return to 1.0343. USD/CAD remains locked in a broad 0.9700-1.0400 trading range as overbought conditions caused the rejection of the top end of the range two weeks ago. A base building processis is underway, with support at 0.9940 and 0.9724 expected to attract buying interest for another test of resistance at 1.0343. Adaily close above this level would resolve the consolidative rectangle pattern to the topside, targeting 1.0468 and 1.0653 thereafter. Target remains located at 1.0335.
EUR/USD – Close above the cyclical high at 1.5905 would favour greater [...]

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