Are Traders Confused?

EUR/USD

Well it’s been quite a while since I last posted. Since I’ve been gone though, the Euro has been having a tough time breaking that 4200 level. While that might look like a good sign to short, I’d like to hold off another day or so before diving in. 4hr stochastics are trending down but are in oversold territory which indicates a short term bullish movement (possibly back up to 4200). At the moment, daily stochastics also supports a bullish movement as they are also trending up. However, the fast stochastics line as flattened out and it looks as though it may cross down. So you can see I have a lot of mixed signals at this point. I don’t like confusion. I’d rather wait until I have a better picture.

GBP/USD

The Cable has been doing a whole lotta nothin the past several days as its been simply bobbing between 2.0300 and 2.0400. At the moment however, both 4hr and daily stochastics are trending down nicely. I’m goin out on a limb here and I’m gonna say that the Cable breaks below 2.0300 and makes it to its 50 EMA at around 2.0250. After that, who knows what might happen. We may see it bounce right back up to within the 2.0300 and 2.0400 range.

USD/CHF

The Swissy has started to become quiet over the last few days and I’m looking for it to break out it sometime soon. The 100 and 200 SMA on the 4hr chart have made a nice lower and upper bound for the range the Swissy has been trading in. 4hr and daily stochastics are showing mixed signs so a directional bias is non existent. I would wait and watch for a breakout of either the 100 or 200 SMA and look to go with the direction of the breakout if momentum looks promising.

USD/JPY

The Dollar has made a decent drop against the Yen since the start of this week, and we are probably going to see a retracement soon. 4hr stochastics are trending down and have just entered oversold territory. Currently the pair is trading around 116.63 and I would watch for it to drop to its 100 SMA at around 116.26 before bouncing back up towards 116.50.

I’m not really big into fundamentals but I feel that they are important to discuss. In this section I will be posting fundamental tidbits that I find interesting from various sources. If you find an article that you think would benefit everyone, please email me (Big Pippin) with your username, the article, and a link to where members can read the entire article.

Now onto the Fundamentals:
  • Eurozone ministers surely don’t want the Euro to be this strong….right?
    • As I said yesterday the Eurozone ministers were beginning their meeting to discuss the weak dollar, yen and renminbi… So… Some traders believe that means the ministers want the euro to be weaker… I believe traders that believe this are barking up the wrong tree… The European Central Bank (ECB) loves the strong euro, and I’ve explained why on several occasions in the past, but for those who missed class on those previous 1,000 times I’ve explained it… The strong euro does so much for the ECB’s mantra to provide price stability… A strong euro fights inflation, and increases its allure for foreign investment into the country. There are more reasons like the price of oil being reduced, so, you can see what I’m talking about now…
  • What’s the cause for the Dollar rally?
    • The dollars strength was not caused by the numbers released yesterday; as the ISM manufacturing data declined more than expected and the ISM Prices paid number also came in below expectations. These numbers show a US economy which is slowing and justify calls for additional interest rate cuts by the FOMC. No, the currencies, like Chuck, are taking a much needed breather. As Chuck explained yesterday, the Euro ‘gapped up’ over the weekend and this pullback is simply the markets way of filling in the gaps the currencies missed on the way up.
  • Housing Data will be extra important with the 50 BPS rate cute:
    • Let’s not blow off the housing data… After a 50 BPS rate cut last week, and the dollar’s fall VS the euro, I think the housing data will be very important.
  • The Chinese Yuan and what it could mean for the Dollar’s future:
    • And of course, if the Chinese do finally allow a much faster increase in the value of their currency, their need for holding US dollar reserves will likely shrink (i.e. much of the reserve build comes from the pegging process). And dollar for dollar they can buy more oil with a stronger currency (and every other major raw material they input—including pigs). At minimum, if this plays out, it could be yet another sentiment hit to the dollar.
News events to watch for tomorrow :
  • 4:30am ET- MPC Meeting Minutes, Average Earnings Index (UK)
  • 8:30am ET- US Core CPI, US Housing starts

For a list of all of tomorrow’s news events, check out our Forex Calendar

  • jgallagher33

    Thanks for the update. The euro is a tough call right now but I think a move down to about 1.3950 is a very real possibility. only time will tell but that looks like a good number to me.

    Thanks for all your work

  • jgallagher33

    Thanks for the update. The euro is a tough call right now but I think a move down to about 1.3950 is a very real possibility. only time will tell but that looks like a good number to me.

    Thanks for all your work