Cont.. Currency war and its implications on Forex market

Cont.. Currency war and its implications on Forex market
Important: Please read the disclaimer at the end of the post.


Short to medium term movement across some currency pairs


USD/CAD

The most undervalued currency in the Forex market is Loonie (Canadian Dollar). We expect a persistence appreciation of Loonie against Greenback (US Dollar) in the short to medium term. However, around parity the currency pair may experience high volatility and is well suited for scalpers. The crude oil price is likely to move up and a similar trend could be observed in Loonie as well is expected the same.

EUR/USD

Europe economy has been hit by number of crisis which were prevalent earlier (western Europe Debt crisis, Irish bank crisis etc.). The appreciation in Euro is hurting European exporters significantly. However, the US economy has fallen into liquidation trap and further bailout or rejuvenate policy may not help US in achieving a turnaround. We expect EUR to appreciate against USD amid high volatility in coming days.

USD/JPY

Twice intervention by BOJ is a warning sign for traders to be cautious for showing confidence in Yen. Traders will avoid long term (months etc.) investment in this currency with positions restricted to intraday exposure. Short term reversal can be expected in this currency in the coming weeks. This currency pair is currently positioned around historical lows.

AUD/USD

The Australian dollar seems to be currently in an overheated state. The Australian economy provides highest interest rate in the developed economy and hedge funds are expected to chase this currency. There is high correlation between price of Gold and AUD. Further appreciation of AUD against USD will be slow and any positive news related with US economy will move the currency pair down sharply. The currency pair current position is around all time high.


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