What are the weakest and strongest currencies among those traded in the Forex market? This question is asked by traders and investors as well as by millions of people all over the world who try to understand which currencies are more suitable for keeping their earnings and savings: USD, JPY, EUR, CHF, GBP, RMB (CNY)?
Which free-floating currencies are the strongest and weakest assets traded by the global Forex community in 2012?
Euro: Weakest Currency?
According to Eugene Olkhovsky, ’s leading expert in financial markets from Canada, most people around the globe assume that Euro is currently the weakest currency among the majors because the eurozone crisis is on everyone's lips. Western media keep scaring us with a possible Greek default and eurozone breakup.
However, the rating of major currency indices (introduced by ) shows that the common European currency is the 2nd biggest loser this year (-0.43%):
The biggest loser is the Australian Dollar index: -1.61%. The expert explains that the Aussie started strengthening in 2008 as most people treated it as a safe haven asset amid the global economic crisis. However, the Aussie has been volatile this year. According to NordFX (TOP member of ’s rating of Forex brokers ), there is a double top in the Weekly chart of AUDUSD. Therefore major players start reducing exposure and taking profits.
However, there is still no major trend reversal. In order to start a new long-term downtrend, the price will have to break and consolidate below the MF pivot (as shown below). Otherwise, the Aussie will probably start another rally to make new major highs. Which scenario will manifest itself? This will depend on the US Dollar and other factors.
The US Dollar is one of the starters of the global economic and financial crisis, which is still underway.
According to Masterforex-V’s theory of global crises, investors start withdrawing their funds from bonds, stock, indices to invest them in the US Dollar. Therefore, other major and minor currencies start weakening against it. This is what we can see this year.
At this point, the US dollar index is fluctuating within a major price range of strategic importance. Therefore, there are 2 options:
1. The price breaks and consolidates above the top of the range, with a further long-term rally ( = another stage of the global crisis).
2. The price breaks and consolidates below the bottom of the range, with a further long-term downtrend (a period of relative economic stabilization attended by gradual devaluation of the US Dollar).
What are the prospects of other major and minor currencies? Well, it depends on whether we will see another major crisis in late 2012- early 2013.
If this is the case, other currencies will devalue against the US Dollar. Otherwise, they will strengthen against it.
