Masoud : EUR/USD Review 7 Nov 10

Hello koala king and folks.

Good day to you.

We had a turbulent and very important week. Several central banks made interest rate announcements and the mid term elections of the US were held. US FOMC statement was released followed by the US Non-Farm Payroll.

In the FOMC meeting, the committee decided to spend 600 billion US dollars to buy long term bonds in an effort to stimulate the US economy. The decision was probably due to

- slow economic recovery
- poor employment figures
- low levels of inflation trending in the past few quarters.

The 600 billion US Dollar will last until the end of the second quarter 2011, dividing out to 75 billion US Dollar monthly. Target of purchase will be the US government bonds.

Having said so, there remained opposition towards this program.

The US Fed also mentioned that close monitoring will be done and if required, adjustments to the program would be made.

It seemed that the announcement was pretty much priced in and hence in order to continue with the bullish momentum, further positive economic data must be delivered from the various regions. The usual market driver of risk appetite or risk aversion will apply. The American economy being the target market of the quantitative easing program, will probably be closely monitored for signs of improvement. Do note though that any effects will probably take months before it can be seen.

I mentioned earlier that the US Feds said that the quantitative easing program may be subjected to changes based on the situation of the US economy. Therefore this will probably increase the importance of the US economy statistics. The US Non-Farm Payroll came out much better than expected last Friday and a knee jerk reaction was observed. The US Dollar strengthened. If this keeps up, the US Feds may reduce the amount of quantitative easing due to the improving economic situation. This may cause the US Dollar to strengthen more.

An article was published in which analysis suggests that the expansionary policies of the US government might have caused the US economy to be "unhealthy and diseased". The US Commerce Department statistics shows an approximate 2% economic growth for the US in the third quarter of 2010. This may spark concerns among international investors. It was mentioned that consumer consumption did not increase significantly and this is not what a flourishing economy should be.

I think that the EUR/USD will probably remain elevated for the first half of 2011 and this will affect the exports of the Euro Zone.



From a technical point of view:

The US Non-Farm Payroll which was better than the forecasts may bring about an environment of risk appetite. If so, the EUR/USD may resume bullish momentum. Do note that 1.4280 is a strong resistance but if broken, it may open up further bullish moves towards 1.4440. On the other hand, if the support of 1.3700 is broken, we may see the currency pair sliding down towards 1.3360.

Have a great weekend.

Masoud.

Masoud is a businessman and a Senior Forex Koala. Connect with him at our page on Facebook.

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• The US Unemployment Crisis
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Masoud : EUR/USD Review 7 Nov 10

EUR/USD Weekly Review 1 Nov - 5 Nov 10

Good day forex trading koalas.

It is a nice cool wet weekend for me and i hope things are fine with you.

If you finished the week green with pips, well done and keep it up! If you did not, do not give up. Remember that forex is not a quick way to get rich. Proper money management and patience is vital.

In the previous review, we noted that the EUR/USD was locked in range between the region of 1.38 to 1.4. This was probably due to the uncertainty surrounding the speculated quantitative easing program by the US Feds. Whether risk appetite or risk aversion would merge victorious, everyone's guess was as good as every others'.




Looking at the EUR/USD chart above, we can see that the currency pair had made an attempt to break above the range.

The week started with a nasty surprise. A forex gap was seen and hopefully no one was caught by it. Manufacturing in the US was better than expected and sentiments in the US were good. On the contrary the cost to insure against the default of certain Euro Zone member countries rose, serving as a reminder that the Euro Zone crisis still threatens to disrupt the economy.

As we approached midweek, sentiments continued to pick up. The anticipation of the speculated quantitative easing program together with an interest rate hike by India and Australia spurred appetite for risk. As a result, the EUR/USD went above 1.4.

Finally the much awaited FOMC statement event came. The plan was 600 billion US Dollar worth and it was more than expected. The market delivered a bullish knee jerk reaction in response, sending the currency pair up over 1.42.

Towards the end of the week however, the Euro Zone Retail Sales and Germany Factory Orders came in negative. This probably rained on the optimism parade and sent the EUR/USD back down to reality. The week ended with the important US Non-Farm Payroll and it was much better than expected. The outcome was an increase in the value of the US Dollar, sending the EUR/USD down towards 1.4. Investors probably decided that the US economy might be picking up and wanted a piece of the action.

***

The currency pair closed above 1.4 and that suggests that the bullish momentum may not be over. Many economists believe that the quantitative easing program may inevitably weaken the US Dollar due to the influx of new money.

It was reported that Germany and China have expressed concerns over the $600 billion US Dollar plan. As it will probably weaken the US Dollar, other countries' currencies will rise in value if that happens and hence that will hurt their exports. There are economists that believe that quantitative easing will not help to stimulate the US economy and may in a worse scenario even spark a currency war between countries due to the need to devalue currencies for competitiveness.

A number of big name investment firms are echoing that the US Fed quantitative easing program will probably encourage optimism for sometime. Global equities and commodities will probably stand to gain.

I mentioned previously that the Euro Zone seems to be a little shaky these days. Do pay close attention to this region as any fallout will probably have far reaching consequences. Even though Greece has received assistance regarding it's budget deficit, a number of investors still believe that the fundamentals of the country are doomed for eventual default.

Over the next week, we have various important economic events such as the US Trade Balance and the German Preliminary GDP. These will give us an insight into the fundamental aspects of the respective economy. You can find the list of the various economic releases in the Economic Calender below.

From a technical point of view, as long as 1.4 holds, we will probably see more bullish momentum.

Trade Safely.

Related Forex Articles from the Koala Forex Training College.

• Quantitative Easing. What Why How?
• How a weaker currency may help a country
  

Read more about the EUR/USD at my buddies' great blogs.

Forex Crunch writes a weekly EUR/USD outlook. It is a very popular write up and he is one of the best.

Winners Edge Trading with his great technical analysis brings about much knowledge to learn.

EUR/USD Weekly Review 1 Nov - 5 Nov 10

EUR/USD Closing Thoughts 5 Nov 10

Good day forex trading koalas.

The time is here again. Soon the markets will close for the weekend and this concludes another week of trading. I hope everyone is green for the week. I cannot help but nag again that proper money management is extremely important!

In the previous review, we noted positive sentiments riding on the FOMC Statement event. Investors are probably optimistic about the new quantitative easing actions. Equities did well. Should 1.42 remain unbroken, bullish momentum should be lurking around.





Looking at the EUR/USD chart above, the 1.42 line broke after having tested the 1.4260 region. The currency pair halted it's advance before the 1.4 region but however, profit taking of the long positions may exert some bearish pressure.

The S&P 500 continues to do good due to the FOMC Statement and the US Non-Farm Payroll. Investors sentiments probably remain positive.

The US Non-Farm Payroll clocked in higher than expected. Jobs were added to the economy and this sparked a relief that the employment market is starting to pick up. With the unemployment rate at 9.6%, any increase in jobs will probably ignite a quick reaction. Hence this may be why the EUR/USD is moving in favor of the US Dollar.

Having said so, the drop of the EUR/USD started before the US Non-Farm Payroll. With the Euro Zone Retail Sales and German Factory Orders coming in negative, investors were probably concerned about the European economy and sentiments fell.

Trade safely and i'll see you for the weekly review!

***

Related Forex Articles from the Koala Forex Training College.

• The US Unemployment Crisis
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EUR/USD Closing Thoughts 5 Nov 10

EUR/USD Daily Review 5 Nov 10

Good day forex trading koalas!

It is the end of the week soon and how is your trading so far?

A few koalas were telling me that they lost money due to having no proper money management. I feel sad and having suffered three before, i know the pain. Remember to always be patient and not let a moment wipe out your account!

In the previous review, Masoud mentioned that the medium term trend would probably be a bullish one. Even if expectations drags the currency pair down, the EUR/USD would probably resume after a short bearish trend.





Looking at the EUR/USD chart above, the FOMC Statement event brought about a bullish run. Clocking in at 600billion USD of quantitative easing, it is more than expected and the investors are optimistic that economic growth may pick up. The S&P 500 went above 1200, supporting the optimism environment. In fact most equities around the world are green.

Due today is important economic data such as the Euro Zone Retail Sales and the US Non-Farm Payroll. Should these figures support the optimism environment, we may see further risk appetite and hence the propelling of the EUR/USD upwards.

From a technical point of view, 1.42 functions as a support for now. This line usually functions as a strong support and hence as long as it is not given a clear break, the bulls are probably still lurking around.

Remember, US Non-Farm Payroll is due today and extreme caution is advised.

Trade Safely.

***

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• US Non-Farm Payroll Oct 2010 review
• The importance of proper money management
  

EUR/USD Daily Review 5 Nov 10

Masoud : EUR/USD Review 3 Nov 10

Hello koala king and folks.

Good day to you.

Tonight one of the most important news for the month, which may have long lasting consequences on the market is due to be released. The US FOMC statement. This has the potential to influence market conditions for the rest of the year. Many traders are looking forward to this event and any forecast of the EUR/USD is like gambling due to the uncertainty! As I said in the weekly review, the basic conditions governing the financial markets, weak signs of the beginning of a decline were noted.

A quick look at the fundamental economic data and implementation of improved policies suggests that the strengthening of the Euro may follow. Hence even if the supportive policies are less than expected in scope, the EUR/USD after a short-term correction may in my opinion, resume a bullish trend towards 1.45. We may be seeing 1.4-1.42 by year end. Looking at the economic foundations of the euro zone, you will see that the risk of debt crisis is probably gone and the main issue is not the market due to the fact that the protective measures had prevented the crisis from spreading. Furthermore, the risk of recession in Europe was never really discussed due to the fact that economic growth in Europe, mostly Germany and France have been satisfactory although Greece, Ireland, Portugal and Spain are poor.

Non-performance of the speculated round two of the quantitative easing program in the US will probably change the market expectations but of course no precise expectation of investors can ever be obtained.

After the Republican victories in the congressional elections of America, it is likely that the Fed chairman, Bernanke's battle to maintain independence of the central bank starts. Although the election result will probably not effect market conditions in the short term, future economic policies may be shaped in a different way.



From a technical point of view:

As I said because due to the FOMC minutes, we can not predict the trend of the EUR/USD with acceptable expectations and hence currently the best decision is to stay away from the market and instead observe the situation and the determination of the direction of motion. Technically, closing above 1.4080 means possible bullish trend while closing below 1.377, the downside pressure may begin. In which case the Euro will probably be reduced to 1.33. A Dow Jones index close below 11,000 units may be a possible sign of a strengthening US Dollar

Have a nice time.

Masoud.

Masoud is a businessman and a Senior Forex Koala. Connect with him at our page on Facebook.

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• Quantitative Easing. What Why How
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Masoud : EUR/USD Review 3 Nov 10

EUR/USD Daily Review 2 Nov 10

Good day forex trading koalas!

A tired koala i am. Sleepless night and i managed to clock only 4 hours. This is almost as bad as entering a position only to have it reverse on me immediately! Arrghh.

Yesterday brought us better than expected US ISM Manufacturing PMI and equities did well for the US. Manufacturing expanded in the US due to growing overseas demand. Demand probably boasted by a weaker US Dollar. Europe however saw increased cost for insuring the debt of certain countries against default. A reminder that the economy remains fragile.





Looking at the EUR/USD chart above, we observe a bullish party of sorts after the support of 1.3880 held.

Equities are mostly green today. Traders, investors and probably even koalas are feeling good. The anticipation of the upcoming US Fed actions to stimulate the US economy and the increase of interest rate by India and Australia probably brought about increased optimism.

Many of you should be aware by now but having read it in a report today, i want to share this observation again. Now we seem to have two groups of economic performance. The struggling economies of the US / Europe ,etc and the on track recovery party of India, China, most economies of Asia in fact and also koala land Australia! The choice is obvious!

From a technical point of view, it seems unlikely that we are going to push up far beyond the established range before the FOMC statement event. The real deal will probably start after that. ( Unless of course something averse happens! )

Besides the FOMC statement event, watch out for other economic data such as the US ADP Non-Farm Employment Change and US ISM Non-Manufacturing PMI.

Trade safely and remember not to over risk.

***

I must try to sleep early tonight. At this rate, i will turn into a zombie koala.
( Listening to Ne-Yo's dance tracks probably did not help LOL )

***

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EUR/USD Daily Review 2 Nov 10

EUR/USD Daily Review 1 Nov 10

Good day forex trading koalas.

It is Monday and i hope you had a great wonderful weekend!

We closed last week with mixed signals. The US GDP data came in rather on forecast but some investors were probably concerned that the Fed may do less than expected to kick start the US economy. With the November 3rd FOMC statement approaching, apprehension would probably continue to plague the market.





Looking at the EUR/USD chart above, we can see .. A FOREX GAP!! Yes. Forex gaps do happen and there is no warning. I hope no one got caught by it.

***

In view of the better than expected US ISM Manufacturing PMI, equities are doing good in the US. Sentiments are probably ok for now. Manufacturing expanded in the US due to growing overseas demand. This is probably caused by the weaken US Dollar. A weaker currency benefits the country in certain ways!

Things however, are not as positive over in Europe. It was reported that the cost to insure against default for the most indebted countries in the Euro Zone rose. If this keeps up, we may get risk aversion from there soon.

As we move towards November 3rd, we are getting more media coverage of the FOMC statement event. It was reported that if quantitative easing is executed, it is probably inevitable that the US Dollar weaken. This will then probably cause a strain on the other currencies.

Remember, no one can predict forex 100%.

Trade Safely.

***

I am a chatty koala. I love to chat and especially to my fellow koalas. However the comments here and on facebook are usually quiet LOL Why Why Why.. everybody let's make some noiseeeeee :)

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EUR/USD Daily Review 1 Nov 10