EUR/USD Daily Review 12 APR 10

Good Monday Koalas!

We knew what happened over the weekend. I hope that did not make your Monday blue.

We ended last week on a bullish note. A European Commission spokeswoman said that the Euro Zone is prepared to provide Greece with assistance. A report stated that Euro Zone deputy finance ministers and senior central bankers decided on the terms of emergency loans. Greece only needed to request.

While suggestive, none of these prepared the markets for the full extent.

The EUR/USD had a gap of more than a 100 pips due to developments over the weekend.

The S&P 500 developed a bullish run too. Confidence in the US economy seems to remain high.

Oil in the meanwhile hovers around the $85 region.

Gold is currently valued at $1161+.

***

Over the weekend, Greece received a promise of up to $61 billion in loans. A combined package comprising of the Euro Zone and International Monetary Fund, this solution is to assist in her financing needs and hence avoiding a failure to meet debts redemption.

It was reported that the Greek Prime Minister called this promise a ‘loaded gun on the table’. Although Greece has yet to see a need to “use the gun”, the very promise and details of the aid package gave the markets and investors the very much needed concrete action plan. Risk appetite increased, many Euro short positions “disappeared into thin air” and sentiments turned positive.

Borrowing costs are indeed lower for Greece now as investors are feeling more assured with a promise of aid. The market effect of the unfortunate event of Poland’s plane crash seemed to be negated by this event. This apparently suggests that the markets remain very focused on Greece issues and hence we need to continue to monitor her developments. A question of whether will this gap be filled remains.

We have important economic data coming up and hence please be vigilant. US Federal Budget Balance which touches on the sensitive issue of the country’s deficit comes up next. Tomorrow also brings us a number of news including US Trade Balance and various Euro Zone countries’ CPI etc.

Bullish momentum may bring us to 1.3680/740.

A strike of the bears again may target 1.3550/1.3455.

***

MANY readers wrote to me about their margin calls As much as we hope for, the weekend is never a guarantee of a pause for the global financial market.

Having suffered 3 margin calls myself ( One of which is from a gap ). I feel very strongly about this. So strong that i will do an article NOW on gaps. I really hope no one needs to experience the horrors of a margin call like i did.

Stay tuned.

Trade safely and ALWAYS practice proper money management.

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