May 16, 2011
Q3 Predictions For 2011
I have a guest post for you today which has been kindly contributed by Christopher Lewis from DailyForex. It basically offers predictions as to where the major currencies are likely to be headed in Q3, which is not that far away now. Anyway here's the article:
When looking at the Forex markets, there are several things that can be concluded when looking around the world. While there is no accounting for “black swan” events, there are several things that are starting to play out in the headlines that could move the markets during this time period.
The first area of concern is Europe. The Greek debt issues are starting to creep back to the forefront, and Ireland recently suggested that they are looking to restructure their debt as well. Be clear, when the phrase “restructure” is used, it means that someone isn’t getting paid. When this happens, it can absolutely crush a currency. While it is speculation to think that the Euro is going to collapse, the truth is that there are a lot of issues just waiting to pop up in that region. In fact, some of the brightest minds are openly wondering how long the Germans and French are going to be willing to fund the poor decisions of the Portuguese, Irish, Greeks, and Spanish. Because of this, we remain cautious about the future of the euro, and think that it may suffer later this year.
The British pound has been strong against the dollar for a large part of this year. The 1.70 level should continue to be the line in the sand and with some of the economic malaise in the UK – the area is likely to be a top in this pair until something good happens in the UK, or the world finally punishes the United States for printing money.
The US dollar will be mixed, but it is hard to see a situation where the world doesn’t run to it when things go wrong. There will more than likely be a move to the USD sooner or later, due to issues in Europe as outlined above. The dollar will probably see continued weakness against other more responsible economies such as Switzerland, but will win “by default” against many others. The destruction of the dollar will continue in the long run, but the feeling that one of these “panics” is coming can’t be ignored.
The rest of the year will not be as smooth as the first part of it has been. The easy profits have been had, and now we shall see concerns overtake the market from time to time. This is obvious as every minor issue causes a sell off in the “risk currencies” in short order. The market acts like a market that has little confidence in the safety of trading. Because of this, we will see strong moves down in commodity currencies as well. However, there will be periods of optimism as well. This is what will cause the choppiness. Even with these headwinds, the likelihood of another meltdown isn't very high. Shorter-term trading will be the order of the day.
About the Author:
Christopher Lewis is a regular contributor to DailyForex, a website that offers Forex broker reviews, technical analysis and Forex news aimed at helping traders make their Forex trading as profitable as possible.