Forex Portfolio Update | MulderFX.com

It was a week to remember. Last week, major support and/or resistance levels were broken in almost all currency pairs. EUR/USD, overtook an important key resistance level of 1.3720-30 and rallied to 1.3840. Yesterday traders sold some long positions and we saw 1.3720-30, this is now a support level. The question is what the next move will be? With upcoming important macro economic figures next week and Friday NFP (NonFarm Payrolls) on the agenda, it will be a volatile week and after this week we will know more about the next movements for the rest of March. The NFP figure is very important for current economic situation in theUS. We also discuss the USD/JPY which dropped from around 83.50 begin of the week to 81.60 end of the week, without any significant upswing. U.S. figures will move the USD/JPY again next week, definitely. We expect that the USD/JPY has upward potential because we think macro economic data from the U.S. will support the U.S Dollar and that we will rally at least towards the 83.00 level.

In this week all eyes were on Libya, Bahrain and the rest of Middle East. How will the situation develop next week and what will happen with the commodity prices like gold and oil. The impact is larger than the Egypt turmoil, especially the oil price sky rocking very fast last week. In the Forex market you need to be flexible in taking positions and switch easily from long to short positions. The currency pair CHF, JPY, AUD and CAD were the strongest currencies last week, the first two because investors are looking for safe haven currencies and last two because oil and gold prices rallied more than 5%.

Our return was volatile like the Forex market last week. How volatile? We saw last week a return more than 45% but also far below 20%. The reason is the amount of open orders, almost 60 positions. Right now our return is 30% for this month with one trading day to go. It sounds bold but for this month we will have a positive return for this month. We will be very satisfied when we have again a good return above 30% after a return in January of 35.6%. We are confident to make a positive return in March again.

EUR/USD (see charts)
We have already briefly discussed EUR/USD above, but we unfold two scenarios, one up and one down. Looking at 12 months high of 1.4280 and lowest level of EUR/USD in 2011, at 1.2870. This week EUR/USD rallied above 61.8% Fibonacci level, way open for 100% Fibonacci, so back to 1.42? The other scenario is a double top formation in 2011. On February 2 the level was 1.3860 and 1.3840 last week. Intraday the EUR/USD reach this level but day close always falls back from this resistance level to area 1.37-1.3750. We still expect the EUR/USD will print 1.30 again in coming months. Which scenario will it be? We are not yet for sure, it depends what the movement will be next week. If we go back towards 1.3840-60 again, three times to this level, often you see a break above this level, so scenario 1 will be the case. Will we the EUR/USD decrease than scenario 2 will unfold. Important support levels will be 1.36 and 1.3430. With a full agenda next week, one of this levels will break 1.3840 or 1.36? We put our money on 1.36.

Other currency pairs spotlight
GBP/CHF: An incredible week for this currency pair. Monday, we saw a level of 1.54, then the whole week fall to 1.49 level. Movement of 500 pips. Reason for this rapidly drop? Unrest in Libya and the rest of Middle East and also almost all macro economic figures from the UK were disappointing. The uncertainty and high oil prices is driving Forex traders to the Swiss Franc (CHF) and the fall in UK economic growth more than expected and also traders worried about high inflation in UK. We are positive for this currency pair in the short term, to fight the inflation, BoE (Bank of England) has one solution and it will be a rate hike. Finally we think , no further unrest will flare up in the Middle East. Traders will increase risk appetite, like after the resign of Mubarak.

EUR/CAD: This currency pair last week was influenced by different economic news/issues. ECB members who want to dampen rising inflation with a rate hike by the ECB and the continued rising oil prices and gold price due to uncertainty in the Middle East. Last week we saw sometimes traders support the Euro, possible rate hike announcement next week by ECB, Mr. Trichet and sometimes traders like the Canadian Dollar more because the rally in gold and oil prices. We expect the EUR/CAD the next week in a range of 1.33-1.37. In this currency pair is range trading a new strategy.

Expectations for next week
Already mentioned earlier, a full agenda next week. Interest rate decisions, growth rates of economies, so a lot of macro economic figures that affect the state of the economy in different countries. Beside economic news, the Middle East obviously has a very important role, they seek for a diplomatic solution or will be more turmoil in Middle East? We expect a volatile Forex market, so we are focussed to end this month well on Monday night but also we want a good start in March. We expect that the U.S. Dollar will be the strongest currency next week, good economic news and also rebound from the losses of this week. Good news out of the Middle East, then the Swiss franc the weakest currency in the coming week.

We are excited!