EUR/USD

The pair could gain momentum after breaking its previous resistance at 1.31. USD has faced a new wave of selling as the market eyes have been shifted towards the central banks reserve diversification out of the dollar on the South Korean central bank that it will reduce its holding of the US bonds. Which have made the higher yielding currencies much more attractive. In spite of US PPI significant figure of Jan the CPI of the same period has come showing a tame inflation forces in US. We expect a pause of tightening interest rate in US soon rather than a faster pace of it. We see a slow down of consuming and the found support of the USD dollar on the fed`s tightening can be short lived as it will hurt the US recovery at some point in the coming few months and the last word will come back to the US twin unsustainable deficits. EUR has been tackled by the unexpected drop of Feb IFO which has come down to 95.5.

USD/CHF
The death of El Hariry and accusing Syria, The oil pipelines explosions in Iraq, the north Korean confess of having nuclear weapons and the reference of the Iranian danger in Bush`s tour in Europe has weakened the pair and helped the light crude oil to come back again above 50$ per the barrel and this is expected to be continued on the growing demand this year with the expectations of further geopolitical concerns in the middle east.


GBP/USD

After The probability of a rate cut has been diminished and the pair has found the support on the 1.6% CPI rise in Dec and Jan the pair has found a support and the market is waiting for another .25% later in the coming few months after the release of the MPC recent rate decision which was 1 to 8 this time to keep rate and the CBI manufacturing figure of 18 can help the MPC which is just waiting for stronger consuming spending data to tighten the interest rate as what was understood from its recent quarterly inflation report.


USD/JPY
JPY has got the same support from the South Korean Bank comments that it is to diversify its US bonds holding like the other Asian currencies against the greenback. But in spite of the deny of these comments that The plan meant that the central bank would diversify reserves more into non-government bonds and did not mean that it would sell its current dollar holding for other currencies, The Asian currencies can be underpinned further on the market focusing on the Yuan reevaluation and its strong probability next year which can help the Asian currencies across the broad later this year. The Japanese officials have realized this and they have started to talk its impact down. JPY has lost most of its gain on last month slump of the Japanese trade surplus and the recent surge of oil prices which can increase the Japanese suffering of the 4th technical rescission period in a decade which can tackle the JPY in the short term.

Best Wishes

www.FX-Recommends.com
FX Consultant
Walid Salah EL Din
E-mail: mail@fx-recommends.com
MOB: +20 12 4659143
TEL: +20 2 6849514
FAX: +20 2 6743468