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The dollar strengthening has not continued and the main currency pairs are still being traded in wide ranges. Today is a day off for the USA and Great Britain markets, thus the amount of trading will be low. The dropping of the pound to the critical support level of 1.9363 has not yet resulted in its falling lower and the rate went up to 1.9850. The weekly graphs show the double bottom pattern and there is a possibility of a further rise of the rate, in case the 1.9920 and 1.9950 levels are surpassed. In such a case the goals will be at 2.0220 and 2.0400. However, there are no specific reasons for the growth of the pound, but for the Minutes of the Bank of England, which showed that except for Blanchflower, which is known for his aggressiveness, all the other members of the Bank’s Committee voted for preserving the rate at 5%. Inflation over 2% is considered temporary, thus a further reduction of the rates is not expected. Apparently, there will be a pause in action in view of the events in the USA. On this background, the pound strengthening seems reasonable. No important data on the English economy is expected this week, thus attention will be concentrated on the US statistical data. The Euro has shown similar dynamics - it has risen from the May low of 1.5285 to 1.5815, which was reached last Thursday. This was facilitated by the German IFO rate, made public yesterday. It turned out to be much better than forecasted. The weekly graphs show quite a different trend for the Euro than for the pound. Instead of the earlier-mentioned double bottom for the pound, we see a double top pattern for the Euro. Thus, a repeated testing of 1.59 or even 1.60 with a further drop to 1.55 may be expected. The US dollar has also fallen against the Swiss franc – from 1.0626 to 1.0217. The Swiss franc is still attractive for investors, in particular during crises and financial turmoil. However, we should take into account that the US dollar has risen by almost a thousand points from mid-March – from 0.9628 to 1.0626. This is quite a significant trend, after which a correction is almost necessary. The goal of such correction has almost been reached - 38% on Fibonacci from the earlier-mentioned trend. The further falling of the dollar may result in testing the 1.0130 mark, which presents half of the range. In case this level is overcome, the par value will become the support level. The Japanese yen has been trading in a narrow range of 102.60-105.70 since mid-May. The upper limit of that range may be broken, which will result in testing of the resistance mark of 107.50 in the mid-term perspective. The world economic development is expected to slow down this year. The most pessimistic forecasts even talk about recession and stagnation, i.e. a combination of inflation and a drop in production. It is hard to imagine a worse situation. The problems of the European economy may soon become obvious, which will result in a drop of the Common European Currency. In spite of the current high Euro rate, the aggressive FRS policy for stimulation of the economy will soon come to fruition. In spite of the problems in the real estate market and overdue mortgage, the US dollar may strengthen again due to the fundamental advantages of the American economy, which are becoming more and more noticeable.
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Return Analysis
