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14 November Forex daily review

Sergiy Zlyvko
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The report was worse than expected, which provoked the traders to sell the U.S. dollar. After J.Yellen’s speech in the Senate Banking Committee, the weakening of the dollar has intensified. Yellen’s statements supported U.S. stock indices, risk instruments and precious metals. She confirmed that in order to turn of the U.S. economy from the crisis, QE3 program will continue this and next years. In her opinion, it’s too early to remove the support from the economy.

Foreign exchange market has responded to the published abstracts from the text by J.Yellen on Wednesday, so the reaction to yesterday’s speech turned weaker. Only the British pound updated a maximum against the dollar. GBPUSD rate rose to 1.6100. The euro/dollar is falling against the EURGBP cross rate and was only able to strengthen to 1.3490.

In the European session the inflation data for the Euro zone is going to be published. In the U.S. session October data on industrial production should be published. On Friday we are forecasting the growth of the dollar. In the first half of the day there are risks of dollar’s weakening, but we think the dollar’s decline will be used to cover short positions before the weekend. We will make an attempt to consider the increase to 81.40.

The euro/dollar remains in an uptrend on the hourly chart during 4 days. On the daily timeframe there is a corrective movement. AC on four-hour time frame shows double divergence. At the present, by the main scenario we are beginning to predict the fall of the euro to 1.3370. It is likely that in European trading the buyers might try to get back to 1.3475. We think this growth is used to minimize the long positions. In order to sellers have begun to feel more confident, the pair should go through 1.3425.

On retail sales data in the UK GBPUSD rate decreased to 1.6015. From 1.5990 on J.Yellen’s speech the GBPUSD strengthened to 1.6100. Currently the pair is trading at 1.6070. On the main scenario we are waiting for the rise to 1.6090 and then a drop to 1.6000. We are considering pound’s drop till Monday. If we made a mistake in the analysis, then as a target can be considered on 1.6135.

Australian dollar could not strengthen against the U.S. dollar. AUDUSD exchange rate closed at 0.9340 level and the latest quotes are trading at 0.9335. Since we are considering the growth of the dollar on Friday, the AUDUSD should fall to the level of 0.9285.

USDCHF rate fell to 0.9135, but does not reach the calculated level. Today, on the main scenario we expect a sharp rise of the dollar, which binds to the closing of short positions before the weekend.

USDJPY was able to gain a foothold above $100.00, which is not surprising after Yellen’s speech. U.S. and Japanese stocks have reacted vehemently to the desire of the Federal Reserve future chairman to slow down to minimize the incentive program and possibly the Asian session will be held again for the Nikkei in the green color. If so, the pair will try to gain a foothold in the area of 100.45.

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