We’re now under 1.25 on EUR/USD. As suggested last week, I thought that would be the movement on EUR/USD. Now we have broken the support level I see that opening the gate for EUR/USD to test 1.20 the figure by end of December/early Q1 next year. What does that mean for the single currency? Technically speaking, it’s buggered. I don’t see any substantial upside for the embattled EUR and I don’t see anything to suggest any strong growth figures or a sustained improvement in sentiment/productivity in the Eurozone as a whole, short or indeed even in the medium term. For this reason, I expect EUR to further weaken with the ECB expected to follow the Bank of Japans lead and add more stimulus. I would expect by Q2 next year for EUR/USD to be trading around 1.10-1.15.

Where do you think EUR/USD will go next year?

There is only really one stand out performer in the FX markets and that is the US Dollar. With the rhetoric from the Fed becoming ever more hawkish, the bond buying program finishing on time, indications that an interest rate rise for the first time in 8 years is edging closer, manufacturing expanding at a “solid” rate, and the NFP (non-farm payroll) figure due out this Friday that should prove favourable for the US Dollar resulting in USD remaining on a firm footing for the rest of 2014.

My 12 month forecast of GBP/USD being under 1.60 by year end ’14 looks like it will be correct. I think there is more to go on GBP/USD now though and a figure of 1.57 in the next 6 weeks will be about right.

USD buyer? I would suggest looking to secure any USD you require this year as soon as you can. I believe it will only get worse for you. As always, it is entirely your commercial decision when to execute your transactions. Please contact myself or one of the trading team to discuss your options or to place a trade.

GBP/EUR is getting back to giddy heights again. For those of you that placed market orders and forward contracts going into the weekend you have secured at very good levels indeed. Will we hang around here for long? I’ve all but given up on trying to guess where GBP/EUR will go. Should it go higher? Absolutely. Will it? I doubt it. We get to a level on GBP/EUR and then it can’t mount a sustained break to the upside. The single currency seems to be able to ward off all attempts from Sterling to push GBP/EUR higher. However, I would suggest we’ll break 1.30 the figure on GBP/EUR beginning of Q1 next year as I do think the UK is on the right track compared with the Eurozone. It has only been threatening to do something for the past 6 years so I guess we should be grateful that it is now about to come good. I would look at 1.28 and 1.29 as realistic levels to aim for on GBP/EUR prior to Christmas. Please get in touch and we’ll implement these orders for you.

We don’t have a heavy data calendar this week. Main things to look out for though are ISM Manufacturing data out of the US, Bank of England meeting/interest rate decision, ECB interest rate decision/Monetary policy statement and the main figure this week that will affect the markets is the NFP figure released on Friday. I expect this to be a strong figure. This will further galvanise the Dollar. If you are a USD seller you may want to consider placing market orders to take advantage of any sharp dollar movements.

If you have any questions please let me know.

Have a great week.

Written by Liam Alexander