EUR/usd
The single currency is in demand now, yet remains at 1.3050, the low hit early this year . At this level the pair was trading in the first days of January and returned there at the beginning of the week on disappointing results of the Italian elections. As has already been mentioned, the pair is more likely to grow than fall in the long run, however in the near term it is still possible that 1.30 will be tested. Apparently, it is an important stage in the struggle between bears and bulls, which will determine the further fate of the pair. If worst comes to the worst the pair will drop down to its 200 MA, which is now at 1.2835. Today the markets will focus on sequestration of the US balance, as none of the chambers approved the budget bill. This doesn't cause any panic in the market since it's been clear for long that cuts will be gradually applied during the year. And though over these nine years they will altogether make about a trillion dollars, it is forecast that in 2013 the spending will decrease by 42bln, not even 85bln reported earlier. The Fed injects twice as much money in the markets. In other words, there is nothing to be afraid of – neither today not tomorrow there won't be any sharp cuts in spending and this means that one can run business in the usual mode. Besides, the second release of the US GDP in 4Q was revised upwards to 0.1% annually against the forecasted decline by 0.1%. On the whole, in February the dollar noticeably grew against most currencies and commodities, so in comparison with them the euro, which hit the two-year low, looks quite strong.
GBP/USD
The British pound keeps cautiously consolidating around its 2.5-year lows. In the medium-term the pound may be negatively affected by the long absence of revival signs in the economy. The rating cut last week may increase the negative at the beginning of the month, as investors will be reshuffling their portfolios in view of new prospects. Still we believe that the pound is too overbought and before the further decline it will perform a much bigger retracement, at least to 1.53.
USD/JPY
The yen is one of the few currencies that managed to maintain its positions against the dollar in February. It even tried to grow, though did not succeed. At present trading is held at 92.50 , the daily charts show systematic buying since Tuesday. In our opinion, in March the pair may depreciate as Japanese politicians has bitten their tongues after the G7 summit, plus deflation is getting stronger. Today's statistics pointed out the CPI decrease by 0.3% y/y in January and the February CPI for Tokyo looks even grimmer, minus 0.9% y/y.
USD/CAD
February proved equally unfavourable for the canadian dollar. The currency depreciated by 3.5% and hit its 8-month high at 1.03 yesterday. Yet, at the beginning of the month it was more expensive than the dollar. The failures of the Canadian currency are caused not only by the poor domestic demand in the country, but also by the growing energy independence of the USA. Technically usdcad may get support at 1.0340.
