EUR/USD Forex Forecast Reviews | Learn Forex Trading: 30 January 2011

Monday, February 7, 2011

Masoud : EUR/USD Weekly Review 7 Feb 11

Hello koala king and folks.

Good day to you.

First week of February, the EUR/USD was largely unchanged. Creating a near perfect doji.

According to economic experts, concerns and pressure of public opinion regarding the financial crisis of the Euro Zone in recent weeks has been reduced. Experts and officials participating in the World Economic Forum meeting in Davos also believe that the risk of a second wave of economic crisis in Europe during the past weeks have been significantly reduced. However foreign investors remain concerned that European countries are still facing the financial crisis.

An International Monetary Fund senior official emphasized that the Europe Union has failed to win international investors confidence about the success of the Euro Zone to curb the debt / budget deficit crisis. It seems that the economic strength and credibility of Europe in recent months has been severely reduced. Without doubt, if debt and budget deficit problems spread in the Euro Zone, international investment in the region will face more considerations.

Economic experts in the World Economic Forum meeting noted the rapid rise of the housing prices in China. This is probably due to the expansionary policies of China.

The US Federal Reserve conducts an expansionary monetary policy to curb with economic problems such as unemployment. 600 billion US Dollars has been planned for this quantitative easing exercise. Foreign countries like China and Brazil believe that continued implementation of the quantitative easing policy will result in a weaker US Dollar and this may affect their exports.

The main reason for the reducing Euro this week is probably due to the speech by Mr Trichet that did not meet expectations. When the European Central Bank stopped buying bonds, the market speculated that this was the precursor to an interest rate hike. Speculations on the possibility of an interest rate hike for the Euro Zone were quenched when Mr Trichet suggested that current interest rates and inflation threats were balanced. On the other hand, Ms. Merkel the German chancellor pushed for greater unity in the Euro Zone for economic growth and competitiveness needs.

On Friday the US Non Farm Payroll statistics was announced. It was much lower than expected but the unemployment rate improved and fell to 9%. Having said so, Mr. Bernanke, the US Fed chairman, mentioned that much needs to be seen first before real sustainable economic growth is achieved. Thus in terms of the US Dollar, the current situation is unbalanced.

Technical point of view: for Monday, due to weak US NFP and Trichet's remarks disappointing, I expect a bearish momentum for the EURUSD. On the other hand and as you can see in above picture, we await for the price to react to the midfield fork. If broken, it is likely that the currency pair will collapse to 1.3330.

Have a great weekend.

Masoud.

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

Related Forex Articles from the Koala Forex Training College.

Sunday, February 6, 2011

US Non-Farm Payroll Review 4 Feb 11

Good day forex trading koalas.

Welcome to another review of the monthly US Non-Farm Payroll event. This is a highly risky and unpredictable economic event and i usually stay out of it. Many folks suffer a margin call during such events due to excessive risk taking.

In the previous review, we noted that the January US NFP came out to be less than expected. However it remained positive and the unemployment rate dropped to 9.4%. This resulted in a wild volatile trading session for the rest of the day.

Looking at the EURUSD 5 minutes chart above, we can see the initial knee jerk reactions of traders and investors as the US Non-Farm Payroll came out lower than expected again. With a range of almost 100 pips in the first 10 minutes, positions either way with tight stop losses would have probably been cleared.

After the initial reaction, the currency pair started to turn bearish as the drop in unemployment rate to 9% was welcomed by many as a sign of an improved US employment market. US Dollar demand rose and US equities were mostly positive. Notice that the 1.36 line was almost non existent during the event and this goes to show the intensity of currency movements generated by the US NFP.

Many investors are saying that the employment market is or even has already recovered. Speculations are that the US Federal Reserve may reconsider their quantitative easing policies. Personally i believe that we probably would need to see a sustained positive data from the employment market before we can be sure.

Trade Safely.

***

Related Forex Articles from the Koala Forex Training College.

EUR/USD Weekly Review 31 Jan to 4 Feb 11

Good day forex trading koalas.

My favorite time of the week is here again! The weekend :) Time to study and reflect on our forex performance and better our quest to make money from forex.

In the previous EURUSD weekly review, we noted that the global economy remains connected across various markets. The escalating conflict in Egypt probably caused risk aversion and further escalation may see more risk aversion.

Looking at the EURUSD Daily chart above, we can observe yet another failed bullish attempt to clear the 1.38 region.

In early week trading, the currency pair developed a bullish momentum. On the H4 chart the EUR/USD was mainly green candles, suggesting a steady trend. Many investors speculate that an increasing inflation risk to the Euro Zone may prompt the European Central Bank to raise interest rates soon. Furthermore the pledge of support from China and Japan remained a major source of confidence towards the region.

When mid week arrived, the bullish momentum had brought the EUR/USD above the 1.38 region. The good economic data from the Euro Zone ( Especially Germany ) brought about much risk appetite. High yielding assets such as the Euro currency were in demand.

Having said so, as the end of the week approached, the Egypt protests continued to escalate. It was spreading to the neighboring countries and concerns regarding the region and the oil routes dampened strongly the positive sentiments and the EURUSD started to fall strongly. Outlook of an interest rate high by the ECB also dimmed. The final blow dealt was the US Non-Farm Payroll. While positive, it was much lower than expected. This probably caused a cascading knee jerk reaction and the currency pair dipped below 1.36.

***

While the US Non-Farm Payroll did turned out to be worst than expected, it was nonetheless positive. Furthermore the unemployment rate has fallen to 9%. The US S&P 500 is currently above 1300 and hence this suggests that the sentiment towards the US is probably still healthy. While so, reports mentioned that this will probably not affect the Federal Reserve quantitative easing plans. Mr Bernanke is probably looking at the condition of the entire economy which includes employment and housing. Furthermore a period of sustained positive employment growth is needed before a concrete conclusion can be drawn regarding the recovery of the employment market. Having said so, officials against the spending of funds on economic recovery will probably use the drop in unemployment rate as a tool.

Over in the Euro Zone, while all was well for sometime now, the failure again to produce and maintain a concrete plan to address the deficit concerns brought risk aversion back to the region. In the recent European Union summit, plans by Germany and France with regards to closer coordination of tax, wage and pension policies met with opposition. The threat of complications remains due to the vast differences between the various economies of the Euro Zone.

From a technical point of view, the EURUSD is already bounded for more than 10 days between the region of 1.36 - 1.38. With the currency pair now at the 1.36 region, close monitoring must be done. If this support fails, we will see 1.34 opened up for bearish conquest. This will probably happen if risk aversion intensifies or the US produces spectacular development without any from the Euro Zone.

Next week will bring us more economic data such as the German Factory Orders, US Unemployment Claims and Mr Bernanke's testimonial. You can find the list of the various economic releases in the Economic Calender below.

Trade Safely.

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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.

Thursday, February 3, 2011

EUR/USD Daily Review 3 Feb 11

Good day forex trading koalas.

Today is Thursday and it is a special day for China. Today marks the first day of the Chinese New Year!

Yesterday's price action brought about a change. The EUR/USD grinds to a stop and hovers around the strong line of 1.38. Many investors are calling for a correction stating that the bullish run of the currency pair is too long too far.

Looking at the EURUSD chart above, we note that the 1.38 line finally gave up and the currency pair dropped like an anchor. After zipping past two important lines ( 1.3740 and 1.3680 ), 1.36 is next on the target list. The fast momentum suggests that this move may be sentimentally motivated.

The situation in Egypt continues to deteriorate. Violent protests are happening and it is even spreading to nearby countries like Yemen. This probably caused risk aversion to surface and the oil prices are rising too due to apprehension regarding oil routes.

Adding on to the bearish sentiments, Mr Trichet of the European Central Bank mentioned that the inflation risks seen recently were broadly balanced. Investors see this as a clue that higher interest rates may not arrive soon and hence the Euro currency lost much of it's appeal instantly!

The US ADP Non-Farm Employment Change came out to be better than expected yesterday. A number of investors believe that this economic data is a preview of the eventual US Non-Farm Payroll and if indeed so, we may be seeing a positive surprise. However nothing is 100% predictable in the economy and hence be careful. A downside surprise may cause further risk aversion.

As mentioned, the US Non-Farm Payroll is due tomorrow and hence trade carefully. Mr Bernanke is due to speak soon too.

***

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Wednesday, February 2, 2011

Masoud : Midweek EUR/USD Review 2 Feb 11

Hello koala king and folks

Good day to you.

Europe's leaders held meetings to review the Euro Zone Deficit Crisis. The European Union Summit to assess the financial and debt crisis is set to be held in March. Informed sources in Europe announced that the meeting is to be held in early March. The Austrian Chancellor emphasized that European Union leaders should as soon as possible decide regarding access to a comprehensive and coordinated strategy to deal with the financial crisis.

Experts and officials participating in the World Economic Forum meeting in Davos also believe that the risk of a second wave of economic crisis in Europe have been significantly reduced.

Foreign investors remain concerned about the financial crisis in the Euro Zone. An International Monetary Fund senior official emphasized that the European Union has failed to give international investors confidence about the debt crisis.

Apprehension regarding the possibility of escalating protests in Egypt and the danger of the oil supply routes being affected caused an increase of oil prices. Some economic and energy experts believe that if the political crisis in Egypt intensifies, the fuel supply through the Suez Canal to U.S. and Canadian markets may be reduced. The Suez Canal is an important strategic waterway for oil and world trade.

The U.S. Federal Reserve with emphasis on the implementation of the expansionary monetary policies in the country asserted that the current U.S. unemployment rate is sufficient justification for the quantitative easing policy. Meanwhile, the Republican Congress and the countries of Germany, China and Brazil continued their strong opposition against the expansionary Federal Reserve policies. The Republican Congress are making calls to reducing costs and the reduction of U.S. liabilities.

Foreign countries like China and Brazil also believe that continued implementation of the US quantitative easing policy will reduce the value of the US Dollar, thus affecting trade.

According to reports, China's economy is now faced with a big problem due to the speculative growth. Chinese economic officials are aware of this issue and are extremely concerned. Housing prices have increased dramatically in China and the housing sector is in a bubble formation. A burst will result in a reduction of China's economic growth. Housing prices in China during the past four months have been ascending due to the rapid increase in economic growth and implementation of monetary and fiscal expansionary policies.

Risk appetite seems to be strong and traders are selling US Dollars to buy high-yielding currencies. After the announcement of the strongest PMI index in Germany, the EURUSD upside momentum intensified. Kansas City Fed President who is a serious opponent of the economic stimulus program says: "Since the economic foundation of United States has not improved, so the economic stimulus program was not successful in practice”. According to him, the market is fully aware of this program and that the FED and the ECB stimulates economic growth differently and now the difference between interest rates is probably favoring the Euro. EUR/USD trades to the highest level in 11 weeks.

Technical look: As you can see in the above picture. the EUR/USD is within an ascending channel. The fundamental point of view is that sentiments in the market is ascending. On the other hand, the EURUSD has climbed for a few weeks and is overbought. It is possible that the market will do a corrective move. Watch out carefully for any change in sentiments.

Have a nice time.

Masoud.

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

Related Forex Articles from the Koala Forex Training College.

Tuesday, February 1, 2011

EUR/USD Daily Review 1 Feb 11

Good day forex trading koalas.

Second day of the week and i hope everyone is making money in forex.

The currency pair started the week with a small forex gap towards the downside. However the EURUSD quickly gained bullish momentum.

Looking at the EURUSD chart above, we can see the bullish momentum in progress. Having said so, the previous bullish run fell short of 1.38 and hence investors will probably be weary of the 1.38 region.

Despite escalating protests in Egypt, the EUR/USD have not seen any major move after Friday. This is very indicative of the improving sentiments towards the Euro Zone. Inflation is increasing and many investors speculate that the European Central Bank will not allow excess inflation to develop ( Hence it will probably raise interest rates ). Furthermore the support of China and Japan, two major economies, is a big boost to the region's stability. In fact the recent well received bonds auctions are probably an indication of confidence.

Tomorrow brings us important economic data including the US ADP Non-Farm Employment Change. As employment is a sensitive issue for the US, much monitoring must be done.

Trade Safely.

***

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