By FXEmpire.com
Introduction: 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.
- The interest rate differential between the European Bank(ECB) and the Federal Reserve(FED)
- Dollar strength drives EUR/USD lower
- FED intervention to weaken the dollar the sends EUR/USD higher
Weekly Analysis and Recommendation:
The EUR/USD continues to maintain strength against the USD, as investors worry about the US recovery and the lackluster eco data. The pair ended the week at 1.3254 as the euro picked up momentum on negative sentiment in the US. Gold also climbed on the weakness of the USD. Friday brought a disappointing GDP report, showing growth at 2.2% when markets expected 2.5%
|
Date |
Open |
High |
Low |
Change % |
|
|
Apr 27, 2012 |
1.3254 |
1.3191 |
1.3270 |
1.3158 |
0.48% |
|
Apr 26, 2012 |
1.3191 |
1.3231 |
1.3263 |
1.3177 |
-0.30% |
|
Apr 25, 2012 |
1.3231 |
1.3196 |
1.3236 |
1.3174 |
0.27% |
|
Apr 24, 2012 |
1.3196 |
1.3149 |
1.3218 |
1.3146 |
0.36% |
|
Apr 23, 2012 |
1.3149 |
1.3208 |
1.3210 |
1.3105 |
-0.45% |
The Euro declined midweek and extended a monthly loss against the Dollar and the Yen, after a downgrade in Spain’s credit rating increased concerns that the systemic debt crisis engulfing much of Europe is spreading at a faster rate. The credit rating in Spain has been cut two levels to BBB+ and S&P said the outlook is negative, as the country struggles with a recession.
The single currency drifted weaker through the course of the day, as reports in Italy showed a bigger decline in business confidence, which sank to the lowest level in over two years. Business confidence in the Euro-zone as a whole also fell sharply in the April reading. There was some positive news, however, with reports that the Dutch government had agreed a 2013 budget.
In the U.S, the latest unemployment data showed that claims for jobless benefits was again weaker-than-expected at 388,000 in the latest week, maintaining the significant deterioration in April. In contrast, the pending home sales data was stronger-than-expected with a 4.1% March increase following a 0.4% gain the previous month.
Rising layoffs, falling home sales and slowing manufacturing activity are sparking fears that the economic recovery is headed for a springtime stall for the third year in a row.
Major Economic Events for the past week actual v. forecast
|
Core Retail Sales (MoM) |
0.5% |
1.0% |
-0.8% |
|
|
USD |
New Home Sales |
328K |
320K |
353K |
|
GBP |
GDP (QoQ) |
-0.2% |
0.1% |
-0.3% |
|
GBP |
GDP (YoY) |
0.0% |
0.3% |
0.5% |
|
USD |
Core Durable Goods Orders (MoM) |
-1.1% |
0.5% |
1.9% |
|
USD |
Interest Rate Decision |
0.25% |
0.25% |
0.25% |
|
NZD |
Interest Rate Decision |
2.50% |
2.50% |
2.50% |
|
USD |
Initial Jobless Claims |
388K |
375K |
389K |
|
USD |
GDP (QoQ) |
2.2% |
2.5% |
3.0% |
Historical:
Highest: 1.5091 USD on 03 Dec 2009.
Average: 1.3709 USD over this period.
Lowest: 1.19 USD on 07 Jun 2010.
Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD
|
Tue May 1 |
4:30am |
GBP |
Manufacturing PMI |
51.4 |
52.1 |
|
10:00am |
USD |
ISM Manufacturing PMI |
53.0 |
53.4 |
|
|
Wed May 2 |
4:30am |
GBP |
Construction PMI |
54.2 |
56.7 |
|
8:15am |
USD |
ADP Non-Farm Employment Change |
179K |
209K |
|
|
Thu May 3 |
4:30am |
GBP |
Services PMI |
54.6 |
55.3 |
|
7:45am |
EUR |
Minimum Bid Rate |
1.00% |
1.00% |
|
|
8:30am |
EUR |
ECB Press Conference |
|||
|
8:30am |
USD |
Unemployment Claims |
382K |
388K |
|
|
10:00am |
USD |
ISM Non-Manufacturing PMI |
55.5 |
56.0 |
|
|
Fri May 4 |
8:30am |
USD |
Non-Farm Employment Change |
176K |
120K |
|
8:30am |
USD |
Unemployment Rate |
8.2% |
8.2% |
Upcoming Government Bond Auctions
Date Time Country
May 01 09:30 UK
May 02 09:10 Sweden
May 02 09:30 Portugal
May 02 13:00 US
May 03 08:30 Spain
May 03 08:50 France
May 03 09:10 Sweden
May 03 09:30 UK
May 08 09:15 Austria
May 08 09:30 Belgium
May 08 14:30 UK
May 08 15:30 Italy
May 08 17:00 US
May 09 09:10 Sweden
May 09 09:30 Germany
May 09 09:30 Swiss
May 09 09:30 UK
May 09 14:30 Sweden
May 09 15:30 Italy
May 09 17:00 US
May 10 15:00 US
May 10 17:00 US
May 11 09:10 Italy BOT auction
May 11 10:00 Belgium
Click here for updated EUR/USD News.
Originally posted here
