EUR/USD Daily Review 12 Jan 10

on January 12 2010 10:55 AM

Simultaneous Release at www.thegeekknows.com

Good day to all!

NEWS ALERT : Risk aversion strikes!

The currency pair dips below 1.4500, attempting to head back towards the previous range.

Similarly, the S&P 500 tested the support of 1140.

Oil having dipped below $80 earlier is currently back above $80, fueled by demand due to the cold winter. We may see more dips to come.

Gold remains around $1150.

***

So what possibly crashed the party?

For starters we have reports of China ordering banks to set aside funds to guard against speculative bubbles. When the economy giant speaks, all shall listen!

Next up, we have Greece! Only yesterday i mentioned that the problem is not fixed? Well, i read news articles quoting an EU source saying that EU is likely to launch infringement proceedings against Greece for failing to provide reliable statistics on its budget deficit and debt.

We must remember that risk averse folks do not like trouble. At the slightest indication of potential problems, we may see them packing up and heading for safe assets.

Having said so, i mentioned a few times now that we are trading in a complicated market these days. Different forces push and pull from all direction! While we are concerned about risk aversion, other forces may be at work too. The US Trade Balance came in worst than expected. This means that the US is importing even more goods than ever versus exports.

Now tell me. Say you want to buy something from country A, what do you need to do?

You sell your currency to buy country A’s currency. There you go! The US Dollar weakens.

In view of these factors and more, we will probably see choppy waters as the EUR/USD tries to find it’s bearing.

Should the bulls strike back, we may see a test of 1.4520/65.

If the bears score victory, watch out for 1.4480/45.

***

I love history topics. Recently i have been watching WW2 documentaries. I did some reflection and while there are wars going on now, be thankful that effort is being done to stop them and care / restrain is taken to prevent a world wide out break of war. Yes, our world is far from a perfect place but yet perfection starts you with.

Appreciate life and the folks around you. Make the world a better place. Today, tomorrow and evermore.

Trade safely!

Read more Forex Articles and Views by The Koala at www.thegeekknows.com

Follow me on twitter

More News from IBT MEDIA