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DailyFX.com, the news and research website of FXCM Inc, has released its Top Trading Opportunities of 2015 where analysts looked at the lessons learned in 2014, where the market stands today and what could come in the future to suggest trends and trades they will be looking forward to in 2015.
Through the second half of 2014, the EURUSD dropped from 1.4000 to well below 1.2500. While this decline encompasses a number of elements, according to Chief Currency Strategist John Kicklighter, much of the momentum was a side effect of the European Central Bank’s efforts. However, much of what we have seen from the Euro’s decline through the end of the year was in anticipation of a growing ECB balance sheet.
For currency strategist Ilya Spivak, selling the Euro against the US Dollar was his top trade for 2014. He reasoned the Fed’s move to taper QE3 asset purchases marked a hawkish policy shift while the ECB looked likely to ramp up stimulus as realised and expected Eurozone inflation readings tumbled.
According to currency analyst Christopher Vecchio, in years past, promises of pending stimulus had put a halt on the declines seen by the Euro at times, but the nature of the current decline in the Euro is different than those previously - context is important.
Senior Currency Strategist Kristian Kerr believes that the move that the US Dollar started last year has a lot of more room to run. He also sees the USD/JPY likely to extend gains in 2015, but the first half of the year could prove choppy as extreme sentiment and positioning likely to weigh.
Currency analyst David de Ferranti sees the Fed remaining on the path towards policy normalisation in 2015. Despite subdued inflation in the US, consistent progress in the labour market may lead policy makers to begin a slow process of hiking rates. This is in stark contrast to the ECB and BOJ monetary policies which are moving in the opposite direction. Furthermore, the RBA and BoE are also likely to remain reluctant to raise rates. This in turn supports the prospect of a continued advance for the US Dollar Index.
strategist David Rodriguez,
for the third-consecutive year, he believes that selling the Japanese Yen will be on the top trades of the New Year. Even though nothing moves in a straight line, BOJ might continue a weak Japanese Yen Policy leading to more quantitative easing.
For Senior Technical Strategist Jamie Saettele, the NZDUSD continues to remain firm relative to other commodity currencies, notably the Australian Dollar. However, a broad multiyear topping pattern warns that the Kiwi may be the next to feel the wrath of a strong US Dollar.
Currency strategist Michael Boutros anticipates further appreciation in the Sterling against the Japanese yen. Technical analysis suggests that the pair is vulnerable at the start of the year with the pullback likely to offer favorable entries. The diverging monetary outlooks for the respective central banks is likely to keep the pound well supported versus the yen in 2015 as the BOJ continues to aggressively ease in an attempt to achieve the 2% inflation target.
According to analyst David Song, the growing deviation in monetary policy continues to foster a bearish outlook for EUR/GBP and EUR/CAD as the ECB struggles to achieve its one and only mandate for price stability. Nevertheless, the Bank of England (BoE) remains on track to raise the benchmark interest rate in 2015.