FX.co ★ Fundamental Analysis for March 02, 2012

As the bubble is currently deflating the euro, the single currency has already increased by more than 250 points since the last Friday’s highs.

Technically, there are signs of changes in the EUR / USD pair’s exchange rate as the level 1.3245 is considered as target level. Nevertheless, the downtrend is not expected to undergo significant changes in the nearest future and is likely to fill the gap near the point 1.3155 in almost two weeks or maybe next Monday.

The Swiss franc experiences the similar situation, having broken down the resistance level 0.91, though their movement is related to the location of euro near the maximum 1.20 and also by Swiss National Bank monitoring.

On the other hand the Australian dollar and Canadian dollar are considered as strong. The first one, linked to gold, did not follow the sharp drop observed by the ounce in the last two days. Nevertheless it represents a central bank whose interest rate is the highest in the central bodies (4.25%) as an effort to curb the inflation. On the other hand, the aussie is supported by the fundamentals of Australia, which since 2008 has rarely mentioned the word crisis.

It is necessary to mention the loonie, that related to the oil (Canada’s the main source of income) reaching every day the multi-month highs without the reversal of the major patterns in the medium-term graphics. We expect the correction of the exchange rate against the dollar to the area of 1.03 / 4 in the coming weeks, though the general uptrend will remain the same. At the moment oil futures are trading above $ 108, and, having indicated the slight weakness, reached since July the new high 110.52for the last hours.
From a fundamental standpoint there is nothing unusual about the movement of the currency. The summit of the leaders of the Eurozone was unsuccessful, as usual, having only postponed the major decisions for the next time.

The 8:30 ET release concerning Canada's GDP is expected to reveal the significant growth of 0.3%, thaough it is necessary to consider that this data is monthly (not quarterly). Nevertheless the release of the given data is likely to influence the loonie’s exchange rate. In the United States the breaking news remains unknown.