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Welcome to the EUR/USD Weekly Review.
This week brought a nasty surprise towards the end.
After failing to break free from the lure of 1.4500, the currency pair gave up and tumbled to the depths of 1.43+.
In the previous weekly review, i mentioned about the resistance at 1.4500 and how news may drive spikes above it? That happened. Therefore you must always remember that resistance and support lines are never a single pip.
Risk aversion seems to have made a comeback as a few of the lingering problems surfaced to haunt the sentiments. For example, Greece’s deficit problem is being highlighted in a negative light as investors seems doubtful of the plan to solve it and the ECB’s strict comments suggests no bail out.
The increasing plans and actions to reduce or remove stimulus measures by the various central banks are also causing a stir as investors are apprehensive of the economy’s ability to cope without extra support. China is rather vocal about stopping speculative bubbles.
In the ECB conference mid week, Trichet said that interest rates are appropriate and investors seem to see this as an indicator of a stagnant interest rate for now. This probably eased the demand for EURO and contributed to the breakdown of 1.4500.
Next week brings us more important releases such as EURO’s German ZEW Economic Sentiment and US’s building permits. We know that sentiments are core to the economy and hence do pay attention to it. Furthermore building permits lead to housing start ups and sales. We know that home sales is important to the economy as it spurs economic activities. Refer to the economic calender for the list of releases.
Watch out for more adverse fall out from Greece’s problem. Furthermore, increasingly vocal comments from China about the need to moderate growth may further dampen the recovery party. In the previous week, statistics such as retail sales in the US took a beating and traders are worried about an uneven recovery in the US. Watch out if further poor releases in US may trigger panic reactions.
On the technical side, we have broken below 1.4500 back into the previous range of 1.4200 – 1.4500.
Bullish developments may bring us to test 1.4500 again while continued sentiment fall out may trigger bearish advancement towards 1.4200.
Do remember the resistance and support lines are never a single pip.
I had readers writing to me about losing their money during last Friday’s sharp dip. I am sadden to hear this. Folks, remember that money is hard to come by. Do not risk it unnecessarily. Plan your trades.
Read more Forex Articles and Views by The Koala at www.thegeekknows.com