Economic Events
| MonJan 16 | 1:00pm | EUR | ECB President Draghi Speaks | ||
| TueJan 17 | 5:00am | EUR | German ZEW Economic Sentiment | -49.5 | -53.8 |
| 5:00am | EUR | CPI y/y | 2.8% | 2.8% | |
| 5:00am | EUR | Core CPI y/y | 1.6% | 1.6% | |
| 5:00am | EUR | ZEW Economic Sentiment | -48.7 | -54.1 | |
| WedJan 18 | |||||
| ThuJan 19 | 4:00am | EUR | Current Account | 0.5B | -7.5B |
| 4:00am | EUR | ECB Monthly Bulletin | |||
| FriJan 20 | 2:00am | EUR | German PPI m/m | 0.1% | 0.1% |
Highest: 1.5091 USD on 03 Dec 2009.
Average: 1.3709 USD over this period.
Lowest: 1.19 USD on 07 Jun 2010.
Support: 1.2780 1.2730 1.2690
Resistance: 1.2840 1.2870 1.2910
Rules:
Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.
The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.
Trading comprises of careful market studying, strategizing, planning and executing the plan in a timely manner. This is entirely different to scalping which is resorted to by many a trader on a regular basis. These traders are often clueless as to the market situation and just use this as a type of defense mechanism to compensate for the general lack of information and knowledge. The EUR/USD is a currency pair that certainly offers a lot of currencies trading opportunities if handled correctly.
Characteristics
Average broker spread: 2-3 pips
Daily range average : 90-100 pips
Best time to trade: Euro Session (0700 GMT – 1700 GMT)
Some factors affecting the EUR/USD rate:
- The interest rate differential between the European Bank(ECB) and the Federal Reserve(FED)
- Dollar strongness drives EUR/USD lower
- FED intervention to weaken the dollar the sends EUR/USD higher
Trading the EUR/USD
Trading Experience: New and Advanced currency traders
Trading Style: Day trading and Swing trading
How to trade?
1) Applying Technical Analysis and/or Analyzing Fundamental News from the Euro and US zone to make EUR/USD trading decisions. Breaking strong psychological levels (1.3000, 1.2000,..) and/or surprising economic news releases can make the EUR/USD move a lot in one direction without much retracements.
2) Since the EUR/USD pair tends to be negatively correlated to the USD/CHF, it is always a good idea to compare both EUR/USD and USD/CHF charts in order to predict future moves, if USD/CHF breaks above an important resistance level and EUR/USD didn’t break support level yet, the EUR/USD is very likely to break below support level.
Analysis and Recommendation:
This week saw the euro hit 16 month and then 17 month lows. Just when you were sure that the Euro could not continue to drop anymore, the bottom fell out, with S&P releasing their official list of European Nations to be downgraded.
This event, will be the controlling event of the upcoming week. It has no opened doubt on the ability of the EU to raise the necessary funds to fund bailouts. The main problem now, is the rating that will be attached to the bonds issued by the EU to raise the funds for the emergency mechanism. The markets and economists, politicains and business leaders kept telling the Merkel-Sarkozy team that time was running out, but they were more concerned with their fiscal pact and long term changes then dealing with the immediate problems. Week after week, meeting after meeting, the ECB, the EU, the EU council all kept promising plans and roadmaps to recovery but never delivering.
Greece has been negoiating their writedowns with their creditors with little success. The last comments from the banks representatives said that the Greek leaders were looking at a different play book.
The euro slid over 1% to $1.2677 versus $1.2826. It had dipped slightly further after the announcement but the currency soon bounced back. The euro fell 0.4% for the week, extending losses for the third week in a row.
The euro will continue to fall this week, though there is a lot of data due from EU countries all eyes will be on the debt crisis only. The closest level of support at this time is 1.25
Originally posted here
