The last 2005 year can be named a year of dollar.

At the end of 2004 when quotations fixed maximal price for euro and minimal one for dollar, for all history of existence of single European currency, the dollar has begun its triumphal procession to the SOUTH.

In 2005 the dollar managed to win back more than 2000 points that dollar increased in weight on 20 percents to euro.

At the beginning of the year the maximum of the price was 1,3700, by the end to year the minimum 1,1640 had been fixed. 

If to look at an annual long-term trend Eliot’s classical development of the tendency: 1,3,5 trend waves and 2,4 waves of correction.

So the period of trend development can be conditionally divided into some stages.

The first stage begins with the beginning of year and lasts 1,5 months till the midst of January the significant support level for this period - the price 1,2730.

At the beginning of the last year as well as at the beginning of this year - the main catalyst of market movements were passions on rates. The market waited for ECB and Bank of England decisions on bank rates. From the very beginning of a year traders reacted rapidly on the decision of two Central European banks by active euro sales after contrary to expectations, the rate was left at a former level - 2 % ECB rate and 3,5 % of Bank of England.

At the beginning of the year the disturbing statements of the leading European powers, expressing concern about euro growth, sounded, the matter was that the overestimated cost price threatened all industry of Europe. Many experts believe that the rate of $1,30 for euro has already threatened the restoration of economic growth of Eurozone’s countries: the strong currency reduces noticeably the competitiveness of European export goods in the world market. Europe depends on export more than America. According to Eurostat agency in Eurozone export provides 15 % of a gross product, in the USA - only 9 %. The concern about euro rise was expressed by France, the second economy of Eurozone. On Monday the Prime minister Jean-Pierre Raffaren said about instability in the world financial markets.

As a result this question was under discussion at the G7 summit.  

The second stage is a development of the third trend wave, a downtrend the dollar growth since the middle of March till the middle of July. Growth of dollar began after correction – equal to 750 points. The main catalyst of the beginning of the third trend wave became the decision on rates, from FRS. On March, 22nd, 2005 at FOMC of the US FRS meeting raised the federal funds rates on 25 basic points. Further growth of dollar was stimulated by unexampled rate of manufacture growth. Despite the growth of budgeted and payment deficiency - manufacture indexes show record values. Indexes of GDP growth are at quite high levels 3,8 % in 1 quarter and 3,3 in 2 quarter.

The third stage - a downtrend on eurodollar began from the middle of September and lasted almost all second half-year - however growth intensity was not so high as at the first and second stages.

The deterrent promoted dollar strengthening was a series of hurricanes in the US southern coast, having stopped oil-producing industry approximately for a month. For this stage a key resistance level became a level 1,2590.

And the catalyst of dollar growth became positive data on trade balance for 2 quarter, and also expectations of the further increase of FRS rate. According to the Trade Balance report of the Census Bureau and the Bureau of Economic Analysis of the Department of Commerce, published in the middle of September, for July, deficiency of trade balance decreased unexpectedly on 2,5 % - $57.9 billion against - $59.5 billion

The dollar was supported by restoration of oil production in Gulf of Mexico and in this connection by reduction of oil prices in world oil exchange. The oil prices, having fixed an annual minimum of $53 in 4 quarter, continue to remain below a key level

$60 for a barrel.

Today within the first day of new trading session - quotations move in a narrow price range.

Technically downtrend has all signs of potential correction - the 5 wave structure of a trend and divergence of oscillators. The trend turn is possible to a line 1,2590. However heat of passions around gas deliveries to Europe, and also a rise in prices on energy carriers in Europe can considerably affect the final dispositions of currencies in the market. Therefore there is possible the script when the above-mentioned circumstances can provoke euro fall and the price will break out downwards key levels of 1,1640. In this case the prices can come back to levels of 2003 year - 1,13-1,11.