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In the previous review we noted that a growing disconnect between the US and Euro Zone economies seem to be happening. While the US economy continued to enjoy an apparent positive outlook, the Euro Zone remains bogged down by the deficit crisis. Speculations of further downgrades in the Euro Zone are surfacing.
Looking at the EUR/USD chart above, we notice a ranging pattern since the start of the week. As of now, the range spans from the red line of 1.3090 to 1.3200. I LOVE IT WHEN MY CHART WORKS!
While sentiments are good, the markets remained limited by outstanding concerns.
China mentioned that it supports the Euro Zone’s action to stabilize the financial situation and that it has taken concrete action to assist some Euro Zone members to resist the deficit crisis. While this probably boosted sentiments, a report that Moody’s may cut Portugal’s bond rating by one or two levels probably offset the positivity. The downgrade consideration is due to the concern that budget reductions may further stall Portugal’s slow economic growth.
Among tomorrow’s economic data brings the US Existing Home Sales. As the housing market is one of the core focus of the US economy, a better than expected data may further spur the sentiments towards the US economy.
Retail sentiment towards the currency pair appears to be split almost equally. This may present as a challenge to forex traders and hence be careful not to over trade.
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