Forex Market Outlook April 4-8

Saturday, 02 April 2011 17:23

After a head turning Friday, we face another important week in the forex market. With the ECB and the Bank of England statements due on Thursday, tons of action is expected once again. Let’s take a look at the major pairs.

EUR/USD

The euro should be traded cautiously ahead of Thursday’s ECB meeting. The pair managed to finish the week near this year’s high (1.4247) and seems to have gained momentum after Friday’s dovish Fed comments.

Looking at the approaching November 2010 high (1.4280), and expecting a favourable ECB, we remain neutral on the euro, but with a slight bullish bias.

GBP/USD

The Pound stays in its down trend despite some gains last week. A weak Manufacturing PMI raised new doubts about a Bank of England rate hike and increased the chances of QE continuation. We expect the central bank’s members to stay cautious in their meeting on Thursday. Until clear signs of monetary policy tightening and economical growth, we like to sell the GBP/USD.

USD/JPY

Following a very positive week, the USD/JPY seems to be back to its pre-tsunami up trend. With the Bank of Japan seen lagging the Fed, we like being long ahead of the monetary policy statement on Thursday.

AUD/USD

The aussie continued its uptrend, triggering an all time high at 1.0394. The pair is likely to trade more carefully ahead of the Reserve Bank of Australia cash rate update on Tuesday and the unemployment rate on Wednesday. Expect the AUD/USD to pop higher on any positive data or news. We recommend buying on dips.

USD/CAD

The Canadian dollar ended the week very strongly. Technical analysis suggests a continuation of the long term down move towards 2007’s 0.9056 low. We watch for the unemployment rate on Friday. We recommend selling any retracement.

USD/CHF

The USD/CHF has been trading sideways for the past week. It failed to remain above .9300 despite a break out on Friday. With very little data coming out of Switzerland, the pair is likely to follow the US dollar movements. We prefer to stay cautious and be neutral.