Analysis

	Currency Market Summary as of April 16th, 2008.

An interruption in the publication of summaries due to the author’s illness did not, however, result in our missing interesting events in the market. The Euro is being traded in the flat in spite of the technical analysis and statements of the finance ministers of G7 that the following weakening of the dollar is unacceptable.
The present situation in the market with the prices is very similar to the period prior to the 1.50 level. The same fluctuations, but below the 1.60 mark, occurred within the last month. Obviously, the further development will depend not only on the market and economic consequences of the strong Euro, but on the political will of the European financial authorities. To a certain degree this political will is restricted by the subordinate position of Europe to the USA, and generally speaking, a decision on the Euro rate will be influenced from abroad.
However, the strong Euro counters the high prices of crude oil and other natural resources in US dollars, which is certainly favourable for the European economy.
The US price index, which was made public yesterday, finally showed inflation accelerating. However, this has had almost no effect on the dollar – 1.5850 to the Euro. The support is at 1.5750, the resistance is at 1.5974.
The British pound dropped to 1.96 from the last month high of 2.04. Basically this is the same flat as in the Euro—dollar rate, just with a broader range. The key support is at 1.9560 and 1.9340, the resistance is at 1.9925.
The reduction of the rates by the Bank of England was conducive to the pound weakening. However, only the month closing prices lower than 1.9550 will result in a new downward trend and the goals of 1.9140 in the mid-term.
The Japanese yen reached 95.74 per dollar in mid-March but in two weeks the rate went up by over 700 points and is presently at 103 yen per US dollar.
Currently trading is within a narrow range of 100 and 102. The closing prices of the month higher than 102.20 will result in the further strengthening of the dollar with the goal of testing the mark of 105.
Generally, we believe that the period of uncertainty in the market is coming to its end. Late April and early May has some interesting events in store for us and it’s hard to forecast the general trend of the major players. A turn or at least a rebound to 1.55 for the Euro will come as a surprise.