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Next week’s Forex weekly forecast

Sergiy Zlyvko
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The main events of the coming weeks that may have a significant impact on the dollar will be the speech of Fed Bernanke in Washington during the annual meeting of the National Economists Club (November 20, 00.00 GMT), as well as the publication of the last meeting minutes of Federal Open Market Committee Federal Reserve (20 November 19.00 GMT).

U.S. regulators are near the beginning of quantitative easing contraction cycle, so the participants are now closely monitoring all the news related to the Federal Reserve. According to polls conducted by Bloomberg news agency, most experts expect that the regulator will reduce QE3 by 15 billion after a meeting in March. Any significant signals of the earliest program folding can be an occasion for dollar’s strengthening.

Single European currency trader will survive the hot week. On Tuesday, November 19 (10.00 GMT) Center of Economic Research in Germany ZEW will publish its Business Optimism Index, on Thursday (08.00 and 08.30) Markit will present the data on PMI indices in the industry of France and Germany and on Friday (November 22, 09.00 GMT) Ifo release business climate index report. All of these releases are the key of macro-economic statistics and can acquire special importance now that the threat of deflation is widely discussed and the need for additional monetary stimulus.

From technical analysis point of view traders should provide the support of 1.3380, which is the first local upward momentum minimum, which began on November 4 after testing the mark in the area of 1.3280. Overcome it down could be signal of an attempt to resume a downward trend, but the movement also must be supported by appropriate macroeconomic statistics. The goal of the decline in this case would be a 200-day moving average at 1.3240.

The Bank of England will publish the minutes of the last meeting by Monetary Policy Committee on Wednesday, November 20 at 09.30 GMT. “Minutes of any central bank are closely monitored by Forex market participants, but the British regulator does not expect any surprises. Its monetary policy reigns absolute clarity. Further easing in the near future is not planned and the rate will be increased after an unemployment level achieves 7.0%. We believe that there are no surprises should be expected and therefore the reaction of sterling will be limited. Thirty minutes later, debates on inflation in Parliament will be and in the light of recent weak data on CPI, Mark Carney’s comments take on added significance and may be able to provoke a large-scale movement.

From technical analysis point of view, sterling looks stronger than all of its competitors. It has already played back all the losses of the previous week and is preparing to move in the direction of yearly highs at around 1.6240. This will be the signal for overcoming the resistance of 1.6120.

Reserve Bank of Australia will release the minutes of its last meeting on Tuesday 19 November at 00.30. Australian regulator usually brings surprises to market participants this year so therefore they will be closely examining the document. We believe that it will not contain allusions to the need for further rate cuts and more likely to have little impact on the market. From the standpoint of technical analysis, the most important level of support for the coming week will be 0.9260. If that level will be overcome, AUDUSD can move down to the area of 0.9150.

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