10 Aug
Posted by: Caitlin Mirams in: Forex News
Daily Outlook: Skimmed 200+ pips off of a three inside down candle pattern from CP yesterday, and I still have part of the position open for a longer term trade to the downside. This could be part of the larger drop down I’ve been waiting for months now. The pair dropped like a rock as risk appetite went running like rats from a sinking ship. For those seeking a fundamental explanation (I don’t even bother these days, personally) here you go:
U.S. small-capitalization stocks plunged Wednesday in their biggest two-day drop since early June, highlighting the anxiety that flooded the market over worries of a global economic slowdown.The Federal Reserve’s more cautious assessment of the economic recovery and data showing slower growth in China sent the broad market into a tailspin Wednesday. Small
By: Hillel Fuld
The USD was on the defensive close to a a 3-½ month low versus a variety of currencies after poor U.S. jobless claims figures raised worries that Friday’s payroll data could paint a sad picture of the U.S. economic recovery.
A negative reading could fuel rumors that the Federal Reserve may consider additional easing steps as early as next week, which could increase pressure on the greenback particularly against the Japanese coin, given the pair’s recent strong correlation with U.S. Treasury yields.
“Unless employment improves, housing demand won’t improve and consumption won’t grow.
The Euro continues to rally, with an acceleration to the upside on Friday after the jobs number out of the US almosted doubled the concesus to the downside. The stock market may not care to much, but the EUR/USD was definitely affected.
The pair still remains in an uptrend, and has come close to the highs of the resistance area near 1.3400. It fell off this level as Friday progressed closing out the week at 1.3275.
Upward trendline support comes in at 1.3150 on the hourly charts, but will rise over time. 1.3150 also correlates well with the lows seen before the advance we saw on Friday. Further support comes in at 1.3110. Significant support is at 1.2960 which held up under a long run of channeling prices.
On the upside, 1.3400 is the pivot point. Moving above it gives it room to run towards 1.3700.
The advance has seen our target hit at 1.3200. 1.34 Read more…
In early July, when the Euro rally was (in hindsight) just getting under way, I reported on the apparent paradigm shift in forex markets, whereby risk-driven trades that benefited the Dollar were giving way to trades driven by fundamentals, which could conceivably favor the Euro. Since then, the Euro has continued to rally (bringing the total to 12% since the beginning of June), confirming the paradigm shift. Or so it would seem.
Euro fundamentals are indeed improving, with an improvement in the German IFO Index, which measures business sentiment, seen as a harbinger for recovery in the entire Eurozone economy. To be sure, Spain and Italy, two of the weakest members, registered positive growth in the most recent quarter. Contrast that with the situation across the Atlantic, where a growing body of analysts is calling for a double-dip recession with a side of deflation.