Is the Euro Finally Ready to Fall?

EUR/USD

Oh yea, the Euro is lookin ripe for the picking right about now. I’ve been ranting and raving about how the Euro is going to drop, and now seems like the calm before the storm. 4hr stochastics are trending down and daily stochastics are in overbought territory which are both good bearish signs. Add to the mix that there is a bearish divergence on the 4hr chart, and the fact that the Euro is at a 15 year high, and you got one nice recipe for a Euro fallout! Look for the Euro to drop to 1.4000 within the next 2 days.

GBP/USD

Well the Cable looked as if it was starting some kind of trend, but I’m still not really comfortable picking a direction in this pair yet. Today we saw the pair shoot up to 2.0300 only to watch it fall right back down to 2.0200. 4hr stochastics are trending down while daily stochastics are trending up. So you can see that the indicators are leaving me a little confused at the moment. In the short term, I would look for the Cable to travel down to the 50 EMA and 100 SMA on the 4hr chart, which creates a zone from about 2.0140 – 2.0170. The pair may bounce up off of that and move back up to around 2.0250.

USD/CHF

The Swissy looks stuck once again at the 1700 mark. 4hr stochastics are trending up and daily stochastics are in oversold territory. Since I strongly believe the Euro will drop, I also happen to believe that the Swissy will move up soon. Currently the pair is trading around 1730 and I would watch for it to continue moving up to around 1800, which is also where the 4hr EMA is at the moment.

USD/JPY

The Yen has been bobbing up and down recently and it looks like it may be doing some consolidation at the moment. However, in the short term, both 4hr and daily stochastics are trending down which indicates a good reason to be bearish in the short term. Currently the pair is trading around 114.83 and I would look for it to continue down to at least 114.50 by the end of tomorrow.

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:
  • 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.