Essay: 90 Days Forecast for Dollar and Euro

Essay: 90 Days Forecast for Dollar and Euro
07/06/2011 Comments Off on Essay: 90 Days Forecast for Dollar and Euro Academic Papers on Business Studies,Sample Academic Papers admin

Sample Essay

The 90 days forecast is based on a long term fundamental analysis of the economic indicators and the economy as a whole which include the monetary policy, fiscal policy, and housing, retail and unemployment data. All these indicators along with other factors impact the price of a currency. A central ban k can intervene to affect the exchange rates but the long term rates are dependent mainly on the strength of an economy. The recent historical pattern of Euro reflects that the value is increasing and will continue to display a similar pattern in the next few months. The outlook for Euro on the long run is quite strong due to worsening conditions in the US economy. The monetary policy, fiscal policy and interest rates impact the dollar more adversely.

The United Nations also called for a new currency to replace the dollar as a global currency which adds to the worsening conditions. The Senate was also asked by President Obama to increase the federal debt limit to $12.1 trillion. The various reports published by the Federal Reserve on the outlook of the dollar are fairly disappointing as the Feds view the dollar continuing to shed weight against the Euro and Euro gaining momentum on the dollar. The technical analysis provides a basis for short term forecasting whereas the fundamentals provide a platform for long term forecasting (Elliot Wave International, 2009). The support level of Euro for the 90 day period is 1.4330 and the resistance level is 1.4950. If the Euro breaks the psychological level of 1.4950 the next major resistance would be seen at 1.5050.

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