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Good Day koalas.
I hope your weekend is well so far.
In the previous EUR/USD Weekly Review, we saw France and Germany disagreeing on the method of aid solution for Greece. Over in the US, despite the apparent positivity, a close look into the US economy shows the sign of a fragile interior.
I mentioned that we should look out for 1.3455+/-. A break of that will open up a new range of downside exposure.
Let us look at the EUR/USD and it’s current status.
Indeed 1.3455+/- failed and the currency pair went as low as the upper 1.3200s.
For most of the week, the Greece deficit crisis continues to haunt the Euro. A downgrading of Portugal’s debt around midweek by Fitch Ratings triggered alarms and the EUR/USD broke through a few supports. This may have caught many traders by surprise but if you have been following the reviews here on TheGeekKnows.com, you will know that the Euro Zone is not in a good shape. Besides Greece, countries like Spain and Portugal have their own firefighting to do.
Nonetheless, investors at the slight of a downgrade of ratings, probably rushed to exit risky positions, particular Euro based ones and seek the safety of “safe assets.” Risk aversion was strong.
Late week, reports started to surface with regards to the agreement of a mixed of IMF and Euro Zone led aid for Greece. Furthermore, the ECB decided to back down from it’s decision with regards to emergency lending rules. This will ensure that should Greece suffers a downgrade of it’s ratings to that comparable of a company, its bonds won’t be cut off from ECB’s refinancing operations next year.
This brought relief to investors and it probably caused the EUR/USD to climb back above 1.3400.
Having said so, i am saddened indeed. I had koalas writing to me saying that they had suffered a margin call. They stacked buy orders along 1.3400. Got stopped out when the price dips but now they are dismayed that it is back above 1.3400.
Dear koala readers. I have said before many many times. I have suffered 3 margin calls before and i know the pain. NEVER NEVER risk excessively. PLEASE! Forex is not an express ticket to riches. Hard work, patience and discipline must be there. Please plan your trades well and practice proper money management.
Over in the US, sentiments continued to be positive. The S&P 500 was relatively unaffected by the woes of the Euro. It remained above 1160 and that may be a sign of a bullish sentiment. Having said so, once again i urge everyone to have an open mind. We must not forget that the US is far from being out of the crisis. Home Sales which is good for the economy remains low and the unemployment crisis of the US is not over. The US’s massive deficit is still ticking time bomb.
Just in today, a report stated that China’s bank regulator ordered lenders to take more care when making real-estate loans as it attempts to increase its efforts to prevent speculators from causing asset bubbles and debt troubles. Once again being the second largest economy in the world, this may spark concerns with regards to a derailing of the global recovery and hence do keep an eye on this development.
Needless to say, next week’s price action will also be on the cues of the Greece deficit crisis. Investors will be looking at how this new apparent agreement on a mixed IMF and Euro Zone aid solution works out.
Next week brings us many economic data on both sides of the Atlantic including the US Non Farm Payroll. The NFP release on Friday coincides with a few Euro banks’ holiday and hence the lack of liquidity may bring surprises. You can find the list of the various economic releases in the Economic Calender below.
I am looking at a range of 1.3200 to 1.3600. However as we all know, exceptional developments may tip the scale and hence be on the lookout.
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