CommexFx reviews _ Forex _Quarterly Report by Dukascopy_ date 07 January 2015

Q1 2015| 2
Dear traders,
It may seem the main FX topics for 2015 are crystal clear–appreciation of the US Dollar amid the highly-anticipated Fed
rate hike and broad-based sell-offs of the Euro and the Yen. The common currency may become a victim of the Euro
zone edition of the quantitative easing. On the other hand, the Japanese Yen is expected to suffer more from lagging
growth and stubbornly low inflation, partially a result of the fiscal tightening. There is an important distinction between
the latter two, however.
Nippon citizens are confident in leadership of Shinzo Abe, as the latest parliamentary election results have shown.
Consequently, the government is likely to keep pushing ahead with the planned measures to revive the economy and
catch up to the leaders among the developed nations without any political hindrance, a salient issue in Europe.
Even though there are apparently less opposition to the QE within the ECB itself, unwillingness of politicians to assist
the monetary authority to steer the economy away from the creeping deflation by implementing the often mentioned
by Mario Draghi structural reforms is unlikely to prevent the gap between the business cycles in the Old and New
Worlds from widening further.
What is particularly amusing is that we had a similar situation a year ago, foreseeing together with the whole market
strong outperformance of the US Dollar, but also depreciation of the Euro and the Yen. Yes, the course of events in
2014 deviated from the base case scenario, mainly because of the geopolitical tensions, but that does not fully account
for the distance between the forecasts and the reality. Despite the confidence of the market, there are always
unknowns in the equation that can change the rules of the game.
Something we can draw from the lessons of the past is that you cannot possibly be too cautious or too conservative, at
least in the context of trading and investing. The analogy might be far-fetched, but if you are climbing a mountain, it is
better if your steps are maximally small and careful – one wrong move, and you may find yourself on the ground.
Kind regards,
Alexander Suhobokov, CFA, FRM
Head of Research
Dukascopy Bank SA

Q1 2015| 3
Table of Contents
page 4
Fundamental
Analysis
page 14
Technical
Analysis
page 23
page 30
Trade Pattern
Ideas
page 35
Expert
Commentary
Aggregate
Technical
Indicator
page 12
Community
Forecasts

Q1 2015| 4
Fundamental Analysis

Q1 2015| 5
Following relatively positive first three quarters, the final months of the year have seen the pace of recovery slowing
down and a resurgence of concerns about the Euro zone’s long-term future. The European Commission acknowledged
the EU economy was not only “particularly weak” as compared with other developed countries, but was also
underperforming compared with other post-crisis economies. Substantial risks to the recovery persist, and major
hurdles to growth need to be addressed if the Euro zone economies are to prosper in the medium term. Nevertheless,
2015 should see several headwinds become tailwinds, including the lagged impact of a weakening Euro, easing fiscal
austerity and more certainty in the banking sector. These factors, coupled with plunging oil prices, will strengthen the
recovery of Euro zone. However, the legacy of the crisis means that the recovery will be slower than previous
rebounds.
Ernst & Young expects GDP growth to rise from 0.8% in 2014 to 1.2% in 2015, and then 1.6% a year in 2016–2018. The
European Commission predicts economic output of the Euro bloc to grow 0.8% this year, down from 1.2% anticipated
earlier. In 2015, growth will remain low at 1.1%, before picking up to 1.7% in 2016. The Euro zone growth outlook was
dragged down by lower growth in the biggest countries, including Germany, France and Italy. Meanwhile, the IMF
forecasts the Euro zone's economy to grow 1.3% in 2015, after a 0.8% gain this year.
Despite a slower growth in the emerging markets, the Euro zone will enjoy stronger export demand in 2015, as the US
and UK continue to recover and a weaker Euro offers relief to less competitive economies. Export growth is seen to rise
to 3.7% in 2015 and over 4% the year after, Ernst & Young predicts. On top of that, the Euro zone’s recovery should
become more domestically driven. Households are set to receive a substantial support from lower energy prices, which
should boost net household income.
However, the threat of deflation intensifies, as the Euro zone's inflation rate declined to 0.3% in November, dragged
down by sharp declines of energy costs. Consumer inflation has not been at the ECB's inflation goal of close to 2% since
the beginning of 2013, and has been sliding since late 2011 when it reached 3%. Inflation will remain below the ECB’s
goal until at least 2016, according to the European Commission. The combination of low growth and low inflation
create problems for high-debt countries such as Italy and Greece. It also makes it more likely that the ECB could be
prodded towards more aggressive stimulus measures, such as large-scale purchases of government bonds and other
assets.
Eurozone
The ongoing slump in oil prices is adding to downward pressure on
inflation globally and should further strengthen the bias for an easy
monetary policy stance.
- Barclays

Q1 2015| 6
Moreover, in the ECB’s second round of targeted long-term loans Euro zone financial institutions borrowed less than
expected, complicating the central bank's balance sheet expansion goal. Altogether, 306 banks took up 129.84 billion
euros in the auction. The cheap long-term loans from the central bank to Euro zone banks are part of the ECB's easing
package, which is aimed at boosting lending in the currency bloc, spur growth and lift inflation. Coupled with purchases
of asset-backed securities and covered bonds, the ECB plans to expand its balance sheet by almost 1 trillion euros to 3
trillion euros by late 2016.
However, following the weak uptake in the TLTRO, pressure has been increasing on the ECB to eventually deploy full-
blown quantitative easing if it is to achieve its goal of expanding the balance sheet to March 2013 levels. The
Bundesbank, in what is seen as an unexpected move, has supported the ECB’s view on taking further stimulus
measures to bolster the Euro zone economy if needed, though the German central bank did not openly back up the
ECB's quantitative easing. The German central bank's language surprised, as Bundesbank Chief Jens Weidmann had
previously reiterated the need of more reforms in Euro zone countries as the main tool for fuelling growth and has
been reluctant to endorse quantitative easing.

Q1 2015| 7
Next year will be a game-changer for the world’s number one economy, which is also expected to be the bright spot of
the global economy, as other advanced nations are expected to grow only modestly. With Europe heading for a
recession, Japan already experiencing one, and China’s and India’s economies slowing, the US will be an even stronger
economic force in the world. While the Fed is predicted to start raising interest rates in the mid-2015 amid brightening
growth outlook, the ECB and BoJ will continue to combat deflationary threat. This policy divergence is likely to continue
to support the US Dollar.
29 October will go down in history as the day when the Fed finally concluded the largest and most aggressive asset-
buying programme in the history of the US, which had supported the world's number one economy since the onset of
the financial crisis in 2008. The six-year old QE allowed the central bank to buy trillions of dollars of mortgage and US
treasury bonds from banks and hedge funds to keep interest rates at zero. Now market participants' curiosity turns to
how the Fed plans to get rid of abundant number of assets it has purchased.
The Fed made the decision to end its QE programme in light of upbeat economic data. The US GDP rose 3.9% in the
third quarter following a robust growth in the preceding quarters. GDP growth, however, will slow slightly a bit below a
3.0% rate in the fourth quarter, but will still remain around 2.5% for the whole 2014, making it the best year for GDP
growth since before the “Great Recession.” Moreover, the jobless rate slipped from 5.9% to 5.8%, the lowest since July
2008. US job market is recovering much faster than initially estimated, as the Fed had projected the unemployment to
reach around 5.9%-6% in the last quarter of this year.
GDP growth is seen improving further to about 3% for 2015. The IMF projects the US economy to expand at annual
3.1% next year, while the OECD also sees growth rate of around 3% in 2015 and 2016. The unemployment rate is
expected to drop to about 5.5% nationwide next year.
Concluding the final in 2014 FOMC's meeting, Fed Chair Janet Yellen said the US central bank plans to hike interest
rates next year, but it would take a patient approach to decide on the timing of the first rate hike, which would not
take place any earlier than late April. Yellen's comments along with the FOMC statement indicated the Fed was not
inclined to start normalizing its monetary stance sooner despite the recent upbeat economic data, including stronger
employment growth and falling oil prices. Still-elevated jobless rate and below-target inflation provides the central
bank with flexibility to take gradual approach to lifting rates. The FOMC statement also showed that the overwhelming
majority of policy makers expect the Fed to raise the federal funds rate by 0.75-1.75 percentage points in 2015.
USA
Based on its current assessment, the Committee judges that it can be
patient in beginning to normalize the stance of monetary policy.
- FOMC statement

Q1 2015| 8
The Bank of England should start lifting interest rates next year to cool the economy as Britain's booming jobs market
leads to stronger wage growth and higher inflation, according to the OECD. The think-tank expects policy makers to
raise rates from a record low of 0.5% in mid-2015. Tighter monetary policy would be a mark of success for the UK
economy, which would support future pay growth through stronger productivity.
Bank of England Governor Mark Carney said the UK economy could benefit from the recent slump in oil prices, which is
seen boosting consumers' spending power and supporting the global demand. The British Chambers of Commerce
upgraded its growth forecasts for the next two years from 2.8% to 3.1% in 2014 and from 2.5% to 2.7% in 2015. With
expected growth of 3.1% this year, it will be the first time since 2007 that annual growth has been above 3%. According
to forecasting group EY Item Club, the UK economy will grow by 2.4% in 2015, well below the 3.1% growth expected
this year. Growth will also be constrained by concerns over the Euro zone and the Ukraine conflict. The Bank of
England's most recent forecasts predict GDP growth of 3.5% this year and 3% next, while the IMF says it will be 3.2%
followed by 2.7% and the CBI estimates are 3% and then 2.7%. The OECD trimmed its forecast for UK growth to 2.7% in
2015, but the UK economy is expected to grow by 3% in 2014 and secure its position as the fastest growing economy in
the G7 this year. In 2016, the UK growth is expected to slow to 2.5%.
One of the main concerns of the BoE was weak inflation, as it slipped to 1%, the lowest level in 12 years in November
as falling fuel prices pushed down transport costs while food prices declined. Despite the weak inflation in the UK, the
Bank of England officials expect their next decision will be to hike interest rates and now they are focused on timing
and a degree of an eventual tightening in policy. Nevertheless, the BoE Governor Mark Carney highlighted the external
risks are the main menace to the UK economy, given that two major economies, Europe and Japan, see their economic
conditions deteriorating, while geopolitical situation remain difficult.
Great Britain
The recent sharp fall in the oil price should support global and U.K. growth.
- Mark Carney, BoE Governor

Q1 2015| 9
China
It has been a bumpy ride for the Chinese economy this year, with multiple growth scares followed by the government’s
policy stimulus to address financial vulnerabilities and structural constraints, and 2015 seems to be no different.
Goldman Sachs sees a moderate but "choppy growth deceleration”, reinforcing the view the world's second biggest
economy is becoming a drag on global economy. According to the World Bank’s forecast, China will expand 7.4% this
year and 7.2% next year, compared with 7.6% and 7.5% previously expected. Meanwhile, the IMF projects a 7.1%
growth for China’s economy. Growth rate at above 7% level is considered high compared with other nations, but for
China it means the lowest in 15 years. Nevertheless, China's government said it would tolerate a “new normal”
economic growth. In the long-run, the Conference Board expects the Chinese economy expanding at a 4% pace
annually after 2020 following decades of rapid growth.
World Bank Managing Director Sri Mulyani urged Chinese policymakers to deepen and implement reforms at a much
faster manner and not rely solely on fiscal and monetary policy to fuel growth. The bank is predicting a 6% growth in
the medium to long term.
Australia
The Australian economy is in the midst of a major transition, moving from growth led by resource-sector investment to
broader-based drivers of activity in the non-resources sectors. During this transformation, the economy is expected to
continue to grow slightly below trend and the jobless rate is seen rising further by mid-2015.
The government highlighted the Australian economy would continue to be bolstered by historically low interest rates,
lower energy prices, and a weaker Australian Dollar. Australia's economic growth rate is estimated to remain
unchanged at 2.5% in the current fiscal year and 3% next fiscal year. Nevertheless, the pace of growth would not be
fast enough to ensure a decline in the jobless rate. In contrast, unemployment rate is seen rising to 6.5% from the
current 6.3%, the highest level in 12 years. Inflation estimates were slightly higher at 2.5% against 2.25% previously.
The Reserve Bank of Australia reiterated the Aussie Dollar remained above most estimates of its fundamental value,
especially considering the recent significant falls in commodity prices, as monetary policies of other central banks are
causing the exchange rate to remain elevated, which is limiting growth in Australia's economy. Thus, the board agreed
that further depreciation of Aussie was likely to be needed to achieve balanced growth in the economy. The bank still
believes the interest rates should be kept unchanged, rather than be reduced further. The policy makers made no
indication they intend to ease the monetary policy further despite investors' speculation that the central bank will cut
rates next year given growing concerns over the Australian economy, as it rose 0.3% in the third quarter, the weakest
quarterly growth since the beginning of 2013. Several trustworthy forecasters, including economists at Westpac,
Goldman Sachs, National Australia Bank, Deutsche Bank and AMP Capital see the RBA slashing interest rate next year.
Asia & Pacific

Q1 2015| 10
Japan
Japan’s economy shrank 1.9% in annual terms in the third quarter, as the hit from April's sales tax increase turned out
to have a longer-lasting and more devastating impact on consumer spending and business investment than expected.
On a quarterly basis, the Japanese economy contracted 0.5% in the July-September period, technically remaining in
recession. As a result, on October 31 the Bank of Japan unexpectedly increased the size of its monetary-expansion
programme from 60-70 trillion yen per year to 80 trillion yen, attempting to bring consumer-price inflation to 2% and
end the deflationary threat which has hampered growth in the economy for the past 15 years. BoJ Governor Haruhiko
Kuroda defended the decision and stressed the central bank stands ready to deploy more stimulus to meet its inflation
goal. On top of that, Prime Minister Shinzo Abe offered a relief to the world’s third biggest economy, as he decided to
postpone a scheduled increase of the tax to 10% that was due to take place in 2015, putting it off until April 2017.
Analysts remain sceptical of the BoJ’s ability to get inflation to 2% in the fiscal year which starts in April 2015. The
Moody's rating agency cut Japan's sovereign rating by one notch as it doubts Prime Minister Shinzo Abe's economic,
fiscal and monetary reforms will help to revive the nation's economy and achieve fiscal deficit reduction goals. The
rating agency lowered its rating to A1 from Aa3, with the outlook remaining at stable.
As to the nation’s currency, after plunging 14% since mid-year, the Japanese Yen's drop is about to stop, the former
Minister of Finance Eisuke Sakakibara said. He believes that the Yen is unlikely to hit its low of 124.14 per Dollar in the
run-up to the financial crisis in June 2007. Sakakibara also highlighted that the Japanese economy is not that weak
despite the fact that negative impact of April's sales tax appeared to be prolonged. Thus, eventually, the tax increase
will loosen its chocking impact on the world's third biggest economy and the Yen will start to strengthen.
The OECD has downgraded its projections for Japan’s economic growth in 2014 and 2015. The international economic
organization said that the world’s third-largest economy is expected to expand 0.4% this year and 0.8% in 2015.
New Zealand
New Zealand's economy expanded at a faster-than-expected pace in the third quarter as low interest rates and record
immigration boosted consumption, while primary-industry production rose to a 15-year high. GDP rose 1% in the July-
September period, up from the 0.7% growth in the preceding quarter.
The Reserve Bank of New Zealand kept interest rates unchanged at 3.5%, with modest inflation pressures allowing the
central bank some time for assessment and more gradual rate hikes. The central bank reiterated its stance that the
New Zealand Dollar is unjustifiably and unsustainably strong, which is keeping inflation contained. The central bank
indicated that it intends to raise the Official Cash Rate three more times over the next two years by 25 basis points in
each case. The RBNZ has already hiked the OCR by 1 percentage point since March.

Q1 2015| 11
New Zealand's economic growth is running at an annual rate of around 3.5%. Threats to the growth outlook include
dairy prices, which are expected to rebound in 2015, the overvalued Kiwi Dollar, and the strength of construction
activity. NZIER forecasts economic growth will average 2.5% in the next five years, after a strong 3.4% in 2014.

Q1 2015| 12
Community Forecasts

Q1 2015| 13
The last quarter of this year was marked by mixed but generally downward development of the EUR/USD currency
pair. In October the Euro rebounded gradually, after the ECB President Mario Draghi outlined that it would not
embark on quantitative easing for now, saying that the regulator would reassess its stimulus program in the first
quarter of 2015. Nevertheless, then the pair faced a moderate decline and set new 2014 low for a number of times in
November and December. During last month of the period, the shared currency fell even more considerably, as the
Fed announced that it expects to start raising interest rates in the upcoming year, despite the previous pledge to keep
them low for a considerable period of time. Despite that, Dukascopy traders believe the pair will rebound
significantly in the first quarter, as the consensus forecast for December 31 is located around the 1.27 mark. While
more than 66% of the votes are bullish, more than 53% of forecasts suggest the pair will stay below 1.27, meaning
that the cross will remain under pressure in the Q1. While trader Rokasltu thinks that rate has potential for growth,
ThePolarFox suggests the Euro will be declining due to inflation issues in the Eurozone and potential QE.
ThePolarFox
“With Europe having deeper
inflation issues and Mario
Draghi struggling with the
urge of taking decisions to
fix them, the Euro is more
likely to keep declining in
the first quarter of 2015.”
Rokasltu
“Despite the end of the year,
when EUR/USD rate is at 1.22
lows and there is possibility
for further downside, I think
that during the 1Q of 2015
rate has potential for the
upside movement.”
EUR/USD

Q1 2015| 14
Technical Analysis

Q1 2015| 15
EUR/USD
2014 Q4 Summary
Last quarter turned to be rather negative in terms of Euro’s development. Even though the pace of decline of the single
currency was not as strong as a quarter ago, the EUR/USD cross dropped to move closer to the long-term bearish target
at 1.2040, which is represented by the 2012 low. The beginning of the previous quarter in October was marked by a
modest rebound of the shared currency, as it advanced above the 2013 low and 38.2% Fibonacci retracement of the
May-December down-move to hit the quarterly high at 1.2888. Despite that, the pair was unable to sustain growth and
continued moving South. The only strong support line was represented by the 23.6% retracement, but the breach of it
strengthened bearish pressure and the pair plummeted to reach the yearly high at 1.2219 by the end of the quarter.
2015 Q1 Outlook
Considering the amplitude of the sell-off from 1.40, which started back in May, it is reasonable to expect a bullish
correction that would remove the strain from the market. At the same time, it is observed that there are no
considerable support levels left in order to push the pair upwards. One of the few is the 2012 low at 1.2040, and it is
considered to be the long-term target for EUR/USD’s bears and it is likely to be reached in January. Two next major
levels are located at 1.1875 and 1.1639 and are represented by the 2010 and 2005 lows, respectively. It seems that the
latter will become the target level for the pair towards the end of the first quarter of 2015. Still, there is a possibility
that bulls will manage to send the pair back to the upside from one of these important levels. If this is the case, bulls
will aim to cross the area around the 2013 low at 1.2750 to ensure stability of the Euro in the Q1 2015.
100-day SMA 200-day SMA
Daily Chart

Q1 2015| 16
2014 Q4 Summary
In course of the last quarter of this year, British Pound continued underperforming versus the American dollar. Since
July, the Cable lost more than 10% of its value, and the decline amounted to 3.9% only in the first quarter. In the course
of previous three months, the GBP/USD pair crossed two major demand areas. One of them was represented by the
23.6% Fibonacci retracement of July-December down-trend move at 1.5918, around which the pair hovered for the
whole October and gained a strong bearish impetus. Despite that, the bearish pressure continued to persist and mostly
reflected strength of the US currency, rather than weakness of the British pound. In November, the pair pierced
through a support at 1.5852, represented by the 2013 Q4 low. The yearly low at 1.5540 was reached on December 7
and since then the pair was unable to decline below this level.
2015 Q1 Outlook
Given that the market proved to be respectful of the six-month down-trend and then updated the lows, the outlook
appears to be strongly bearish with respect to the British currency. As mentioned before, the 2014 low is now placed at
1.5540, which currently manages to play the role of a sustainable support and is likely to act so in the beginning of
2015. Any rebound from here is projected to be capped by the 2013 low/23.6% Fibonacci retracement around 1.59,
which is unlikely to let bulls to go further. However, if the bullish break-out becomes the case, we can see a climb
towards the major level at 1.70, but the probability of this scenario is still rather low. From the downside, unless the
current 2014 low is crossed, the medium-term outlook for January remains neutral. Meanwhile, taking into account the
long-term perspective for the whole first quarter of the upcoming year, GBP/USD’s main target remains 1.48 – the
lowest level seen in 2013.
GBP/USD Daily Chart

Q1 2015| 17
2014 Q4 Summary
Despite the growth difficulties USD/JPY currency pair faced in the beginning of the previous quarter, the US currency
appreciated considerably in November and December, posting the steepest rise in value since Q4 2012 – Q1 2013 time
period. The cross started last quarter on a bearish note just below the 110 major level, as it was unable to hold there
for a long period of time and declined to 105 in first two weeks of October. However, after that the bearish trend was
momentarily changed by a strong movement to the north. Confident bullish momentum let the pair erase the 2008
high 110.70 and surge above this level. Some minor stops were registered at 2007 December high and 2007 October
high at 114.70 and 118, respectively, but the Greenback generally continued to climb against the Japanese yen. As a
result, the new annual high was set at 121.84.
2015 Q1 Outlook
In the previous quarter we estimated the Japanese currency to depreciate down to around the 2007 December high at
114.70. However, the reality turned to be much pessimistic for the Yen, as it dropped to 121.84 versus the US dollar
already by mid-December. After these developments, we would suggest the currency pair to consolidate around this
year’s high during the first month of the next year. Nevertheless, the long-term continuation of the bullish trend seems
more realistic for the time being, as there are major support clusters that are keeping the pair uplifted. They include
the 2007 October high together with the 23.6% Fibonacci retracement of Oct-Dec up-move around 118, as well as 2007
December high and 38.2% retracement around the major level of 115. From the upside, however, the biggest problem
for bulls is going to be created by the 2007 high at 124.15, which is expected to be reached by the end of March 2015.
USD/JPY Daily Chart

Q1 2015| 18
2014 Q4 Summary
After Gold’s unsuccessful three months through September, the yellow metal stabilised during the last quarter of this
year. The very beginning of the quarter was marked by a positive development for Gold, as it reached the quarterly
high at $1,255 by the end of October. However, the US dollar overtook a lead and started to climb, which drove the
price of Gold to the downside in November and it hit the 2014 low $1,131. Therefore, the bullion fell as much as $260
per ounce from this year’s high at $1,389 back in March. During the second part of the quarter, the bullion traded in
the direction of a round level at $1,200, around which it decided to close the Q4 and whole year 2014.
2015 Q1 Outlook
Presently the XAU/USD cross is trading around the major level at $1,200, which is limiting Gold from moving in any
direction. From the upside the pair is capped by the 38.2% Fibonacci retracement of March-December down-trend
move, 100-day simple moving average and the long-term downtrend at $1,230. This resistance is very unlikely to be
breached with relative ease. From the other side, the bullion is well-supported by the 2013 low at $1,180 and minimum
of this year around $1,131. They both are strong enough to keep the metal hovering at least around the current market
price. It is possible these factors will contribute to the fact that we are going to see the sideways movement in course
of first three months of the next year. Despite that, usually the Gold is a subject to a strong influence from fundamental
aspects, which are reflected in bullion’s quotes and may drive the price without considering low-impact technical
levels.
XAU/USD Daily Chart

Q1 2015| 19
EUR/JPY Daily Chart
2014 Q4 Summary
In general, the last quarter of 2014 was distinctly Euro-positive due to the weakness of the Japanese Yen. Interestingly,
the year’s low and high were reached during Q4, meaning the trading range was relatively wide. However, most of the
time the pair was trending upwards, as the Euro appreciated from this year’s low of 134.14 to the highest point at
149.80. The psychological level of 150 seems to have scared the EUR/JPY bulls away, as the pair started to decline after
approaching the market at the beginning of December.
2015 Q1 Outlook
After reaching the highest level in 2014 (149.80), EUR/JPY started to fall towards the monthly PP that is located at
145.73 and eventually touched it. The main question remains whether the pair continues to trade above the 145 mark
or falls below the threshold. In case the Euro holds its positions above the monthly PP and the 145 level, then a
rebound is likely to follow, and 2014 high should become the target in the first quarter of 2015. Nonetheless, the pair is
in a down-trend unless the 148 level is broken, thus the bearish scenario may not be ruled out. As mentioned, the
selling pressure noticeably increased after a test of 149.80, and the pair has lost around 400 pips since then; therefore,
a strong support area would be necessary to stop the current retreat. Moreover, the 100 and 200-day SMAs are well
below the current trading level, namely around the 140 level, also adding to the bearish picture. All in all, if there are
no major headwinds in the market, we see the pair trading in the 145-148 range for most of Q1, as both currencies are
relatively weak.

Q1 2015| 20
Daily ChartAUD/USD
2014 Q4 Summary
In Q4, AUD/USD prolonged the down-trend that started to form in the last month of the third quarter. Following a
sharp decline in September, the pair consolidated during October and even showed some promising bullish signs;
however, they soon vanished, as the Aussie started to retreat in the mid-November. Since then there have only been a
couple of positive daily gains, and the cross still remains biased to the downside. Moreover, the pair is trading below
the 0.82 mark, which is the lowest level seen in 2014.
2015 Q1 Outlook
It is hard to call the pair’s performance calm, as AUD/USD has been declining all the second half of the previous year.
The driving forces have been one-sided, with the Aussie being outperformed by the strong US Dollar. In our view, the
biggest challenge the pair is going to face is the psychological level at 0.80. This level has not been reached since the
middle of 2009. However, even if this support is probed, we believe AUD/USD cross will manage to remain above it.
The currency pair dropped to the levels seen back in 2009 and 2010, thus a decline lower seems highly unlikely.
Nevertheless, a strong rebound also does not seem like an undertaking the currency is willing to commit to. Therefore,
a partial negation of the latest retreat is to our mind the most probable scenario in the Q1. An alternative course of
events is consolidation around 0.81/0.82, which is yet another possibility.

Q1 2015| 21
USD/CAD Daily Chart
2014 Q4 Summary
The US Dollar has been constantly outperforming its Canadian counterpart since July, after the greenback fell to the
lowest levels in 2014, namely 1.06. Overall, the fourth quarter was very similar to the preceding three months, as USD/
CAD continued to hover withing the boundaries of the bullish channel. Moreover, the pair is trading substantially above
the 100 and 200-day SMAs located at 1.1160 and 1.1027, respectively. This further confirms the strength of the US
currency. The highest level was reached just recently, on the 14th
of December, when the currency pair jumped to
1.1673.
2015 Q1 Outlook
USD/CAD chart is a mirror image of AUD/USD, as the US Dollar heavily outperformed both currencies. Our expectations
for Q1 is that the US Dollar will remain bullish; however, the first month of 2015 may well have a corrective nature. It
could be a decline towards the 1.1500/1.1450 levels, while later in the quarter the pair could test 1.17 and then hover
near 1.16/1.17.
Nonetheless, there is still some downside risk for USD/CAD if it fails to gain a foothold at current levels. In case the
currency pair dips below the up-trend, this may prompt the bears to drag the pair lower; especially with the 100 and
200-day SMAs being substantially below the current market price. The up-trend started to form early July and still
remains in effect. It is expected to keep determining the pair’s movements also in the first quarter of 2015.

Q1 2015| 22
NZD/USD Daily Chart
2014 Q4 Summary
The last quarter of 2014 has been considerably less turbulent for NZD/USD, and the pair has been trading in relatively
narrow range, following pronounced bearishness in Q3. The New Zealand Dollar did not fall significantly below than last
quarter; although, it did set a new minimum at 0.7608. Additionally, the cross formed a triple bottom pattern during
the quarter, with the neck-line standing next to the psychological level of 0.80.
2015 Q1 Outlook
Just like many other currencies, the New Zealand Dollar also underperformed relative to the US Dollar; however,
throughout the Q4 it has mostly been fluctuating in the range stretching from 0.77 to 0.80. At first it seemed like the
pair might form a triple bottom pattern, eventually leading to a recovery. Now the chart resembles a falling wedge
pattern. Nevertheless, the falling wedge pattern is a reversal pattern as well, meaning the possibility of an upswing has
not diminished.
If NZD/USD does rebound, it will have a chance to touch 0.80, which in turn is likely to give the pair a downward
impetus, forcing the it to return to the present trading levels. The expectations of a sustained rally still remain low due
to the fundamental strength of the Greenback and a lack of faith in the kiwi among the market participants. Despite the
pattern there is higher probability of NZD/USD sliding lower, and we expect it to sink below the 2014’s low at 0.7608.
The potential Q1 minimum could be around 0.75/0.74; however, by the end of the quarter we see the commodity
currency around 0.76.

Q1 2015| 24
What performance do you expect from the Euro versus its major
counterparts during the fourth quarter of this year?
We expect the Euro will continue to fall during Q1 of next year. The
depreciation against the Dollar will be larger, since the greenback is
rising more broadly. Independently, we are much less negative on the
Euro and expect it to trade with the much more mixed spectrum on
the crosses. Thus, our expectations are driven by the general Dollar
gain against most of its major currencies.
What will be the main drivers for the Euro during the fourth quarter
of this year?
We assume the Euro zone drivers are quite neutral. Although expectations for the ECB QE program, particularly with
sovereign
bonds, is going to be a major factor, we believe the market is now largely taken on board. The central bank will act to
include sovereign bonds in its asset purchases, since surveys indicate that we have moved to around the 77%
probability of that by now. Thus, we assume it does move up towards 100% in the first quarter, but any damage done
to the Euro has mostly already happened.
What are your forecasts for EUR/USD, EUR/AUD and the EUR/GBP for the fourth quarter of this year?
We expect the EUR/USD pair trading down to around 1.20 levels. We expect to see the EUR/GBP at 0.80 in the Q1.
And finally, talking about the EUR/AUD currency pair, we can see it rolling up to 1.46 levels by the same period of
time.
Euro
Adam Cole
Global Head: FX Strategy
RBC Capital Markets
UK
Although expectations for the ECB QE program, particularly with
sovereign bonds, is going to be a major factor, we believe the
market is now largely taken on board.
- Adam Cole

Q1 2015| 25
What performance do you expect from the British Pound versus its
major counterparts during the fourth quarter of this year?
We believe the Pound will most probably fall against the US Dollar,
partly due to the fact the financial markets are pushing back the
expectations of the timing of first rise in UK interest rates, partly
because we have moved closer to the May 2015 general election,
which could bring some concerns about political risk. Moreover, the
government begins to step up its planned fiscal tightening. That tends
to slow growth slightly, which may also influence the currency.
What will be the main drivers for the Pound during the fourth quarter
of this year?
Certainly, the most important driver in the short term are the
expectations around the timing of interest rate moves. We anticipate
the US Federal Reserve will raise interest rates around the middle of 2015, but the ECB will not be raising it until the
early 2016. Thus, we believe the interest rate differential will be the main factor pushing the Pound lower. However,
there are also some structural factors, for example, that UK has relatively large fiscal and current account deficits.
These factors, I suppose, over time will definitely weaken the currency.
What are your forecasts for EUR/GBP and GBP/USD for the fourth quarter of this year?
On the GBP/USD forecast, our official house forecasts are 1.55 at end Q1 2015 and 1.52 at end Q2 2015. Talking about
the Euro, we expect less movement. We look for the Sterling to decline only slightly with the EUR/GBP rate coming
down to around 0.78.
We anticipate the US Federal Reserve will raise interest rates
around the middle of 2015, but the ECB will not be raising it
until the early 2016.
- Ross Walker
Ross Walker
Economist
Royal Bank of Scotland Group
UK
Pound Sterling

Q1 2015| 26
What performance do you expect from the US Dollar versus its major
counterparts during the Q1 of 2015?
In general, the US economy has pleasantly increased the pace of development,
which will obviously lift up the currency. Hence, we expect some further
strength in the US Dollar against the vast majority of the Group of ten
countries’ currencies, particularly the Euro and the Japanese Yen.
What will be the main drivers for the Dollar during the same period?
I believe the ECB is going to broaden its asset purchase program to sovereign
bonds in January. That will be an important factor driving the EUR/USD pair
lower. Yet, our overall outlook on the matter is that the US data will remain
consistent with the Fed tightening the monetary policy in the middle of the
year 2015. In addition to that, the US rates should continue to move higher,
which will widen the interest rate differentials in favor of the Greenback and
support the US currency.
What are your forecasts for EUR/USD and USD/CAD for the Q1 of 2015?
We see the EUR/USD currency pair trading at 1.20 levels, and the USD/CAD to be at 1.14 for the first quarter of the
upcoming year.
US Dollar
We expect some further strength in the US Dollar against the
vast majority of the Group of ten countries’ currencies,
particularly the Euro and the Japanese Yen.
- Vassili Serebriakov
Vassili Serebriakov
FX Strategist
BNP Paribas
US

Q1 2015| 27
What performance do you expect from the Canadian Dollar versus its major
First of all, we are already touching our Q1 next year forecast for the USD/CAD;
therefore, we may have to revise the numbers. However, essentially, we think it is a
story of a gradual appreciation for the specified pair during the year of 2015, and we
see the US dollar outperforming its counterpart. However, we would expect the
Loonie to pick up a little versus the Japanese Yen, and the Euro to weaken against
the Canadian Dollar over the course of the next year. Overall, we foresee the
Canadian Dollar to follow the anticipated appreciation we have for the greenback
against the lags of the Euro and the Yen but to a slightly lesser extent.
What will be the main drivers for the CAD during the same period?
The US interest rates that are expected to rise a little more strongly than Canadian, at
least in the first part of 2015. The Bank of Canada is going to stay on hold for as long
as possible, which will keep the interest rates widening in favor of the US Dollar
against the Canadian Dollar. Eventually, we are not quite negative on the economy. Yet, it is more likely to see some
downward divisions to growth expectations in Canada with commodity prices weakening and, perhaps, more is still to
come.
What are your forecasts for EUR/CAD, GBP/CAD for the Q1 of 2015?
The Canadian Dollar has weakened a little more than we expected for the end of this year. Regarding the EUR/CAD pair
we are looking at something in the region of 1.41, whereas for the GBP/CAD 1.79 level is likely.
Canadian Dollar
The Bank of Canada is going to stay on hold for as long as possible,
which will keep the interest rates widening in favor of the US Dollar
against the Canadian Dollar.
- Shaun Osborne
Shaun Osborne
Chief FX Strategist
TD Securities
Canada

Q1 2015| 28
What performance do you expect from the JPY versus its major
Over the months of Q1 2015 we continue to expect the Japanese currency to
trade on the softer side with the Greenback rally broadening, whereas the
financial conditions remaining fairly favourable for risk assets. We see the
USD/JPY pair trading quite close to current levels. Talking about the EUR/JPY,
it could even move a little lower from where the pair is located now, with the
primary focus in G10 markets on the ECB. This, however, has more impact on
the EUR/USD in particular.
What will be the main drivers for the Yen throughout the first quarter of
2015?
While the strength of Japanese Yen seems unlikely to be pronounced, we
anticipate some risks from an improved Bank of Japan outlook or slowing pace of outflows to foreign assets leaning
against the softening we have seen in past months.
With the sales tax pushed further back, the consolation is that volatility in output and prices should be lower and more
predictable. While the Yen depreciation has been significant, the fall in energy prices keeps risks for inflation on the low
side. Investors should pay attention to the spring wage negotiations, as these will form the basis of more medium term
views for inflation on the part of policymakers.
What are your forecasts for USD/JPY and EUR/JPY for Q1 of 2015?
Citi expects to see the USD/JPY pair to trade close to 120 levels for the end of the first quarter and as concerns the
EUR/JPY our forecast is 145 for the same period.
With the sales tax pushed further back, the consolation is that
volatility in output and prices should be lower and more predictable.
- Josh O’Byrne
Japanese Yen
Josh O’Byrne
FX Strategist
CITIgroup Global Market LTD
UK

Q1 2015| 29
What performance do you expect from the Aussie during the Q1 of 2015?
It is clear that the Reserve Bank of Australia wants to have a weaker currency,
which is going to help the economy in terms of the rebalancing story. Therefore, it
will make exports more competitive, as well as help the manufacturing, tourism
and educational sectors. The situation should start to improve under a lower
exchange rate. Moreover, it should certainly help to offset part of the damage been
done by the low terms of trade and a weaker backdrop from some of the major
trading partners and the decline in mining investment.
What could be the main drivers for the AUD during the first quarter of 2015?
Commodity prices are going to be an extremely critical factor in terms of the Aussie
behaviour alongside with the awaited interest rate outlook in Australia. In addition, I would like to mention that
prospect on the Greenback will be quite influential on where the AUD trends. At this stage we think that the US
Dollar is generally going to remain on quite a firm footing, particularly against the Euro and the Japanese Yen. We
believe the domestic interest rates have a high possibility to come down, and we anticipate that commodity prices
are probably going to move sideways from current levels before moving higher into the second half of 2015, as
Chinese growth and global economic activity look better.
What are your forecasts for AUD/USD, EUR/AUD and AUD/JPY for the end of 2014 and Q1 of 2015?
We expect the AUD/USD currency pair to trade at 0.82 levels by the end of Q1 of 2015. Talking about the AUD/JPY
we see the pair at 101 and we anticipate that the Euro will touch the 0.6068 level versus the Australian Dollar in Q1
of 2015.
It is clear that the Reserve Bank of Australia wants to have a
weaker currency, which is going to help the economy in terms of
the rebalancing story.
- Jonathan Cavenagh
Australian Dollar
Jonathan Cavenagh
Currency Strategist
Westpac
Singapore

Q1 2015| 30
Trade Pattern Ideas

Q1 2015| 31
USD/ZAR
200-week SMA
By establishing a solid support at 6.50 in 2011 USD/ZAR was able to initiate formation of the bullish channel that
remains topical to this day, already consisting of more than 200 weekly bars. Accordingly, unless the lower boundary of
the pattern at 11.0 is breached, the outlook for the currency pair will be positive. And even though the indicators are
mixed on the weekly chart, most of the monthly technical studies suggest the momentum will stay intact in the
foreseeable future. Therefore, a pronounced bearish correction is not expected until the upper trend-line forming the
pattern is reached, and thus the current up-swing will be completed.
Nevertheless, there is a significant probability of the current upward trend reversing, and this risk should not be
ignored. The potential turning point is the resistance at 11.84. USD/ZAR has already made an attempt to surpass the
2008 high, but so far to no avail.
Moreover, we have spotted a divergence between the price and some of the technical indicators, a fact that also
speaks in favour of a reversal. For example, while the latest high was charted above the penultimate peak, both RSI
and Stochastic failed to step over their Sep 21 values. Meanwhile, the SWFX market participants are undecided with
respect to the future of USD/ZAR, as 46% of open positions are long and 54% are short.
USD/ZAR
Channel Up
A pronounced bearish correction is not expected until the upper trend-line forming the pattern
is reached, and thus the current up-swing will be completed.
Weekly Chart

Q1 2015| 32
AUD/NZD
200-week SMA
During the 2007-2010 period the pair was explicitly dominated by the Australian Dollar; however, there was a transfer
of power to its neighbour in the beginning of 2011. There are no signs the bulls are going to regain control any time
soon.
Regarding a more recent development, AUD/NZD has recently bounced off the upper trend-line at 1.13 and thus
confirmed the relevance of the pattern once again. A more important event involved the 2008 low at 1.0640, which the
pair left behind and continued to move deeper south. Since there are no noteworthy demand areas anywhere near,
the sell-off may extend through the intermediary supports until 0.98 (lower down-trend line of the channel) without
any hindrance.
Nonetheless, we should recognise there is a chance of a short-term pullback before the bearish momentum resumes
with new strength. Perhaps because of this possibility an overwhelming majority of the traders, namely 70% of them,
are planning to profit from appreciation of the Aussie. Still, the technicals are against such a scenario—most of the
weekly and monthly studies give ‘sell’ signals, and right now it seems impossible to accurately guess which of the
nearby supports can trigger buying.
AUD/NZD
Channel Down
there are no noteworthy demand areas anywhere near, the sell-off may extend through the
intermediary supports until 0.98 (lower down-trend line of the channel) without any hindrance.
Weekly Chart

Q1 2015| 33
NZD/CAD
200-week SMA
NZD/CAD bottomed out at 0.6160 during the first months of 2009, leading to incipience of the bullish channel that now
has an impressive length of more than 300 bars. In the course of these six years the New Zealand Dollar appreciated
47% relative to its Canadian counterpart and appears to be in a good position to keep advancing even further.
The main reason for a bullish outlook, both in the short and long term, is the proximity of the currency pair to the
major trend-line that connects the 2009 Feb 1 and 2013 Jun 9 lows. Additional support is provided by a combination of
the 200-day simple moving average and some of the 2007-2012 peaks at 0.84. Consequently, the most likely scenario is
a rally from the current levels up to the previous top of 0.9654. If this resistance is broken, we can expect an extension
of the surge up to 1.00, near which NZD/CAD will come into contact with the upper boundary of the channel and thus
will be poised for a bearish correction.
Meanwhile, the sentiment is neither bullish nor bearish—the long positions constitute 45% of the market, even though
in general the Canadian Dollar is currently one of the least preferred currencies in the SWFX market, bought only in
40% of cases in all its crosses.
NZD/CAD
Channel Up
The most likely scenario is a rally from the current levels up to the previous top of 0.9654.
Weekly Chart

Q1 2015| 34
EUR/GBP
200-week SMA
Starting from the very beginning of 2009 the single European currency has been largely weakening against the Pound,
which has ultimately led to formation of the bearish channel on the weekly chart. And just recently, after bouncing off
the upper boundary of the corridor, EUR/GBP formed yet another downward-sloping channel, confirming the pair’s
intention to remain on the bearish course.
However, the pair needs to overcome a serious obstacle represented by the support at 0.7760 so that it can fully
realise the bearish potential. Thus, if the 2012 and 2014 lows give in before the accelerated down-trend at 0.79 is
violated, the Euro will be expected to underperform until the pair hits the lower edge of the major channel,
presumably in the region of 0.70.
Conversely, should the bulls at 0.7760 withstand the selling pressure and throw the price above 0.79, there will be few
reasons for EUR/GBP not to recover to 0.83. But once in the vicinity of the major down-trend and 200-day SMA, the
bullish momentum should dry out, exposing the common currency to a decline towards the lower boundary of the
main channel. It is also worth mentioning the negative bias is reinforced by the monthly technical indicators—at the
moment five out of eight studies are sending ‘sell’ signals.
EUR/GBP
Channel Down
Should the bulls at 0.7760 withstand the selling pressure and throw the price above 0.79, there
will be few reasons for EUR/GBP not to recover to 0.83.
Weekly Chart

Q1 2015| 35
Aggregate Technical Indicator

Q1 2015| 36
EUR/USD
GBP/USD
Daily chart
Daily chart

Q1 2015| 37
USD/JPY Daily chart
USD/CHF Daily chart

Q1 2015| 38
EUR/JPY
AUD/USD
Daily chart
Daily chart

Q1 2015| 39
USD/CAD
NZD/USD
Daily chart
Daily chart

Q1 2015| 40
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CommexFx reviews _ Forex _Quarterly Report by Dukascopy_ date 07 January 2015

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CommexFx reviews _ Forex _Quarterly Report by Dukascopy_ date 07 January 2015