Forex Trading: 20 January 2012
In the forex markets
, the euro has caused some pain for those bears that have been enjoying the recent downward trend in the single currency.
Yesterday saw EUR/USD jump and continue to go higher throughout the day with the pair at one stage looking like it might even get back to $1.3000.
The general risk on trade yesterday supported the single currency and this morning we're seeing EUR/USD at $1.2950.
For now it has broken the back of the downward trend that had set in since November but the jury is still very much out as to whether this can be maintained.
Near term support and resistance are seen at $1.2860/00 and $1.3000/15 respectively.
The euro's strength has allowed it to get the better than of sterling causing GBP/EUR to crash back down below €1.2000. This morning the pair is at €1.1960 finding a bit of support, but a break below here might open up €1.1900.
Forex Trading: 19 January 2012
In line with global equities pushing higher, the euro has taken full advantage and seen a two-day rise against the dollar.
You may wonder why this is happening considering several Eurozone countries had their credit rating downgraded this week.
Firstly, there was the successful bond auction for German and Portuguese debt and secondly, US manufacturing data showed that factory production rose the most in a year.
Traders took all the positivity and embraced risk again, selling safe havens like the dollar and yen. This morning EUR/USD is trading at $1.2860 and appears to remain on the upside, approaching its previous high.
Forex Trading: 18 January 2012
The euro attempted a recovery to get EUR/USD back above $1.2800 but it couldn't quite get back above there. Only this morning it made another attempt, only to fail once again, taking the single currency back towards $1.2780 at the time of writing.
Technical analysis of the hourly chart highlights a double top formation and this shows how difficult it is for the euro to make any traction at the moment as it truly remains the unloved currency of the forex markets.
The trend remains firmly in a negative stance and near term support and resistance is seen at $1.2700/2680/2645 and $1.2805/2840 respectively.
Forex Trading: 17 January 2012
Economic data starts to pick up again today with CPI numbers from the UK. The year on year figure is due to decline from 4.8% to 4.2% mainly due to the fact that last year's VAT hike has now come out of the figures.
Expectations continue to point to further declines in the rate which will be most welcome for the UK consumer.
The euro has managed to rally this morning on the back of equity markets moving higher and increased risk appetite. The strength comes as quite a surprise and goes against the trend considering the news for the single currency hasn't been good at all.
S&P followed their ratings cuts of countries with a cut to the credit rating for the Eurozone's "big bazooka" fund. Despite the rally this morning, we could very quickly see this unwind, especially if the other major credit rating agency Moody's comes in with the cull.
The EUR/USD market
is currently trading at $1.2752 and traders going long of the market should be cautious here.
Forex Trading: 16 January 2012
The euro is facing a real uphill struggle at the moment and forex contracts for differences
investors are going to find it tough to find any kind of reason to buy into the single currency.
It hit an 11 year low against the yen and is approaching a 17 month low against the dollar, which is really carving the trend for safe haven currencies at the moment.
Whilst Greece is on the brink of default, France and Austria lost their AAA rating and Italy, Spain, Portugal and Cyprus had their ratings cut by two notches.
The EUR/USD pair is trading around $1.2670 this morning and the trend could remain bearish as it continues to be capped by a downward trend line.
Forex Trading: 13 January 2012
The euro was in good shape yesterday following the successful bond auctions in Spain and Italy.
It was also buoyed by comments from the ECB President that his flooding of the money markets with cheap funds has been making a material impact to credit. It's hard to see when overnight deposits at the ECB continue to rise each week, but then maybe he knows more than most.
The moment the bulls took control yesterday EUR / USD rallied back above $1.2800 and this morning we're at $1.2860.
The bears will feel that this move was more of a bear squeeze though and expect upside to be short lived since the downward trend remains firmly intact.
On the other hand, the bulls will point out that yesterday's move formed a bullish engulfing candlestick and follows a couple of other weak bullish candlestick signals.
A temporary bottom might have formed so key upside levels over the near term are $1.2900 and $1.2940 meanwhile support is seen at $1.2760 and $1.2725.
Forex Trading: 12 January 2012
The euro's down trend remains in place and at the time of writing EUR/USD is at $1.2700. This is where the action in FX markets could be today with the ECB rate decision and subsequent press conference.
If Mario Draghi is seen as being particularly bearish in his view of the Eurozone and let's face it, it's hard not to be, then this could put further downward pressure on the single currency.
But even if the euro does continue to weaken, there's nothing he'll need or even want to do about it and the Germans in particular will be delighted to see it weaken further.
Forex Trading: 11 January 2012
The euro's downward trend looks to be continuing and is capped by a downward trending line. EUR/USD is $1.2770 at the time of writing and can't seem to gain any traction from the decent bout of risk appetite in equities that we've seen so far this year.
For now though the declines seem to have been halted somewhat as the action in Europe is now picking up again following the break for Christmas and New Year.
With lots of summits coming up there might be a respite in the selling of the euro but as mentioned for now the single currency remains the dog of the FX futures markets
Near term support and resistance for EUR/USD are seen at $1.2700/2660 and $1.2790/2815 respectively.
Forex Trading: 10 January 2012
The euro strengthened yesterday against the dollar, which could be explained as some profit taking by traders on short positions. However, as stated yesterday, upside for the euro was always going to be short-lived simply because the Eurozone debt situation is nowhere near resolved.
Investment bank UBS say another reason that the dollar will become stronger against the euro, is because the US will reduce their dependence on oil imports and the faster growth will encourage investors toward dollar assets.
The euro is trading down this morning against the dollar at $1.2759, but we are still awaiting some news to come out of Merkel's meeting with IMF head Christine Lagarde today.
Forex Trading: 09 January 2012
The euro is becoming the whipping boy of the forex CFD trading
markets as it hit a 16 month low against the dollar and an 11 year low against the yen.
The fact that Friday's better than expected NFP figures, which generally would increase investors' risk appetites, were followed by weakness in the euro really tells us where sentiment lies regarding the Eurozone.
Even if something positive is announced following the meeting between Sarkozy and Merkel in Berlin today, we would expect this to be limited to the very short term and simply signify a bear market squeeze. Currently the euro is having a strong push, up at $1.2755 against the dollar.