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Next week Forex forecast

Sergiy Zlyvko
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U.S. dollar somewhat strengthened its positions in the global currency market in the period from 16 to 20 December as market participants assessed the outcome of the last meeting of the Federal Open Market Committee Federal Reserve.

U.S. regulators decided to start reducing the quantitative easing program. It lowered the volume of securities purchases by 10 billion a month and at the same time made it clear that it will be the rate of decline, which will stick to the end of each meeting, of which eight per year are held. Thus, by the end of 2014, QE3 will be completely phased out.

The coming week will mark the celebration of the biggest holiday of the year for the U.S. – the Christmas and therefore there will be free of significant macroeconomic statistics that could affect the dollar’s position. The most serious release will be the publication data on orders for durable goods on Thursday 24 December, but the activity in the foreign exchange market in this time traditionally significantly decreases, and therefore its value will drop dramatically.

In general, during the Christmas week the currency market is characterized by thin and can be as excessively volatile and slow-moving. Activity subsides in the stock markets also.

In the period from 24 to 26 December banking day weekend will be in a number of countries in the Eurozone so we recommend to refrain from trading on the single European currency and the British pound. December 25 is a holiday in all Catholic countries.

Important macroeconomic statistics from the Eurozone, the UK, Australia and Japan in the coming week will not be published. Movement of currency pairs will be determined by the horizontal support and resistance levels. Prospective corridor fluctuations for the pair EURUSD is 1.3580 – 1.37.

Prospects for the British pound, supported by positive macroeconomic data and monetary policy of the Bank of England, has remained good. It is the strongest currency on the market. In case of the decrease close to important technical levels, in particular 1.6240 against the dollar, sterling may be interesting to search for long positions.

Australian dollar and the Japanese yen have all chances to continue its gradual weakening against the U.S. currency towards 0.8560 and 108.60 respectively.

The main event of Monday December 23 will be the publication of GDP data for Canada of September. From other developed economies of the world there won’t be any macroeconomic statistics that can affect the mood of the market players.

Canadian economy slows down somewhat in growth in recent months, which was the reason for the Bank of Canada to change its rhetoric. It is no longer talk about a possible rate hike soon. However, whatever the report was during the Christmas week, it may has a limited impact on the market. USDCAD pair will continue to remain in an uptrend and will have a chance to try the strength of the resistance at 1.0725.

Movements of other currency pairs will be determined by the horizontal support and resistance levels. We do not expect large-scale movements.

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