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First let me give a quick recap to yesterday’s market action and then I will get into my analysis for the upcoming week. Some highlights from yesterday’s news:
· Bloomberg reports Germany may use KfW bank to buy Greek debt
· EU says Greece needs another EUR 4 bln in budget cuts
· Chicago PMI rises to 62.6 from 61.5; stronger than expected
· Reuters: Long dollar position on IMM* largest since Lehman collapse
· S&P 500 rises 0.1%
· Oil up 1.51 to $79.68; gold little changed at $1116
· AIG reports large loss, says may need more government aid
· US Q4 GDP revised to +5.9% from 5.7%, consumer spending weak
· University of Michigan consumer sentiment index falls to 73.6 from 74.4
· US existing home sales
Continue reading–>EUR/USD At Crossroads
There’s been no shortage of major surprises this week from both the euro and the dollar as economic data continues to deify analysts expectations. Here’s a quick summary of the news for today:
French February consumer confidence -33, way weaker than median forecast -28
Italy February business morale 84.0 (better than median forecast of 83.7), which is up from 83.2 in January and also highest read since June 2008
German Unemployment Change +7k vs median forecast +18K. Unemployment rate is steady at 8.2%
UK prelim Q4 2009 business investment -5.8%, -24.1% y/y
Confidence in the European economy is still very much on shaky ground as reflected in the euro zone February economic sentiment, an index of executive and consumer sentiment in the 16 nations using
Continue reading–>EUR/USD: Still Uncertain
Traditionally you will see this thing breakout in the direction of the main trend, but with recent economic developments, watch carefully over the next 24 hours. We might simply see this thing bounce off of support once it reaches 1.3467. My money is on price action not being able to break much below 1.3467 and if so it would almost certainly find support at the weekly S1.
In the blink of an eye things have changed.The EUR/USD will probably turn slightly bullish now that some major fundamental data has come out regarding both the euro and the dollar. First off, a report I wasn’t planning on being a big surprise turned into one as Industrial new orders in the European Monetary Union grew 0.8% in December, much better than market forecasts of a 1.2% decrease for the month which would have extended the 0.6% fall in November. GfK German Consumer Climate was also slightly up beating expectations. This helped euro rally out to 1.3572 session high.
At 10:00 am EST Ben Bernanke’s comments continued to turn the EUR/USD slightly bullish as he affirmed that US economy still needs
Continue reading–>Euro Turns Slightly Bullish
With extremely indecisive market conditions during all the major sessions on Monday, the bulls took charge of the EUR/USD during Tuesday’s Asian and early European market hours. I patiently waited this one out all day Monday and into Tuesday’s Asian and European sessions until the release of the the German Business Confidence Survey which I said to look out for in Sunday’s post. German business confidence unexpectedly fell for the first time in 11 months to 95.2 from 95.8 in January and was all the fuel that bears needed to start a massive sell off that lasted for 3 hours straight and dipped over 100 pips lower before finding some support. Many are blaming the coldest winter in 14 years
Continue reading–>Sell EUR/USD at 1.3667
The week began slowly and then got downright scary as my initial analysis of a continuation of the main downtrend was proven wrong as price action bridged the gap provided by my slower MA’s and reached the weekly R1 before stalling. That brought me several losses on the way up as several of my attempts to sell the upward movements got stopped out real quick. I patiently waited for the R1 to be reached and jumped back in, and was then taken back into profits as price action dropped back down below it’s week opening levels. I was certain that this huge surge in downward momentum would bring us to the weekly S1, but didn’t weather the extreme volatility that
Continue reading–>My Trades for Feb. 14-19
Last week was a continuation of our range bound trading that began Feb. 8th, and except for the fake out provided by Bernanke and friends on Thursday with the Fed discount rate hike, we continue to be range bound. Now that price action has returned to pre-release levels, I believe it shows that we are locked into a battle of fundamental and technical forces and that the parameters have been set to watch for a breakout. A return and close above 1.3800 would mean we are definitely going back up before we go down any further, while a return back below 1.3540 would mean sentiment has become more bearish and I would look for a move down to the 1.3300’s
Continue reading–>Fundamental Outlook for Feb. 21-26
Yesterday and today were quite the roller coaster ride, as Ben Bernanke surprised everybody with a hike of the Fed’s discount rate at the close of Wall Street. Not surprisingly the response was immediate and all the markets were impacted. The EUR/USD collapsed to a 9 month low at 1.3444 overnight, about 20 pips above the important support line of 1.3423 that it has been eyeballing for a few weeks now. This begs the question of why was it released after the US stock markets were closed? The answer is quite important as it’s a lesson in how differently “dumb money” and “smart money” reacts to economic news. They knew there would be a metaphorical S%#* storm over a relatively
Continue reading–>Weekly Wrap Up for Feb. 15-19
Classic bulls versus bears battle this morning in the the U.S. as the New York session see tremendous volatility. I was certainly on the edge of my seat watching as my huge profits from Tuesday’s bounce off weekly R1 trade, which had netted me close to 200 pips by New York open, got cut in half thanks to China and Russia who apparently wanted to put some distance between their 1.3500 barriers and the market and begun aggressively buying EUR/USD, pushing it as high as 1.3653 and almost reaching the 50 fib level from this week’s 1.3782 to 1.3538 drop. As I write it appears that the bulls have begun to lose footing and price action has fallen from the
Continue reading–>Bulls vs Bears
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