Forex Daily Analysis 2012-03-05

Wall Street closed another green trading week as NASDAQ kept setting new highs, S&P 500 crossed above the important level of 1370 points, though eventually it closed under this resistance. The rising came on the background of improving economic data as GDP showed an annual growth of 3% and continuing jobless claims fell to new low.

This week was extremely volatile in the commodities market as oil prices touched the level of $110 after rumors regarding attack on one of Saudi Arabia important oil fields, but the largest oil producer denied the rumors and the oil closed around $106 on Friday. The precious metals were also on the center after Bernanke said that the price of $1800 for an ounce of gold reflects a bubble and caused heavy sales of the metal that shed $80 that day. The silver also influenced by the events and fell nearly 10% during Wednesday.

EUR/USD

Europe got some encouraging events during the last two-weeks and after the Greece crisis seemed to be calmed for a while, the ECB gave the European banks more than 500 billion Euros in order to ease the credit problem that the banks are having.  The European bid rate published on Thursday and it expected to remain on the current levels. However, as usual, the investors will wait for the ECB press conference to get indication about the economic situation. One of the most important data is published on Friday, which is the employment status in the US - Non Farm payroll change & unemployment rate.

On the technical aspect, in spite the fact the US stock market rose, the EUR loose power against the USD after few weeks of a bullish rally. Stochastic levels are indicating for an overbuying situation, which means that the EUR might correct down to 1.30. However, strong rally in the stocks might help the EUR to resume strengthening.

GBP/USD

The pound made an impressive bullish session after the USD failed in breaking-down the support at 1.565 two weeks ago. The pair made the triple-bottom on the support and reached the target we set for the bullish movement at 1.60. The expected resistance appeared around that levels and heavy selling took the pair down under 1.58. If the USD continues strengthening, the pair might fall to 1.565 again. However, the pair reached Fibonacci levels in which a bullish reversal might occur.

The bank of England will announce the interest rate on Thursday, 45 minutes before the ECB. The bank rate is expected to remain unchanged and the investors will concentrate on the MPC rate statement.  

USD/CAD

The Canadian dollar has been strengthening against the USD for several months and last week the pair broke down the important support at 0.99. However, as it usually happens after break-down or break-ups of extreme levels, the pair did not continue falling and it closed around the break-down level on Friday. A better than expected GDP data published in Canada that day but the general strengthening of the USD prevent the CAD from gaining more power. If the USD continues rising, the pair might reach the 200 SMA and the psychological number 1.0. However, if the bearish reversal occurs around the current level, the CAD might try to slide under 0.98.

The Bank of Canada will publish the interest rate on Thursday, half-hour after the ECB, and the interest rate is expected to remain at 1.0%.

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