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Good day Forex traders.
Hope your weekend was good.
Last week, we ended the week with a bearish note for the EUR/USD. A former Federal Reserve Chairman was concerned that the Euro Zone might break up. The Chief Executive Officer of Deutsche Bank AG mentioned that Greece might not be able to meet her debt obligations in full. The Chinese Premier said that world recovery was not solid as the sovereign debt crisis worsened. There were even rumors that Germany might leave the Euro Zone. A report surfaced mentioning that France threatened to leave the Euro Zone during previous negotiations. It was denied by the officials.
The EUR/USD continued it’s bearish momentum dipping below the previous low of 1.2329+/-. However support and resistance lines are seldom a single pip and hence the currency pair remains attracted to the region.
The S&P 500 takes a hit and is testing 1120 now.
Oil took a major hit too and is currently trading at $74+.
Gold remains elevated at around $1220+. This may be an indication of continued risk aversion.
It was reported that the demand for insurance against a drop in the Euro is the highest in more than 7 years. Investors are probably worried that the massive amount of funds used for the aid may erode the currency’s value. Investors are also worried that the deficit problems may not be solved. Furthermore the shift of stance on government debt purchases by the ECB may have caused a lost of credibility.
Sentiments are negative as global stocks and commodities fell in value. It was reported that European banks are starting to display signs of mistrust in the money markets. Rising borrowing costs and the cost to hedge against losses are typical indications. Should this get worse, we face the danger of being in a similar situation as the 2008 crisis.
Tomorrow brings us important economic data such as the German ZEW Economic Sentiment and US Building Permits. Both of which crucial indication to economic health.
Now that the EUR/USD has “tasted” below the 1.2329+/- low, bearish momentum may target 1.23 / 1.22.
A bullish relief may see 1.24 / 1.2440.
Dear readers i had more than 10 hours of flight today and i am totally drained. Was not a smooth day too. Hope you pipping is better than my day. Remember finish the week GREEN!
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