Masoud : Midweek EUR/USD Review 6 Oct 11

Hello koala king and folks.

Good day to you.

The draft budget for next year in Greece which has cabinet approval on Sunday strive to reduce its budget deficit. Meanwhile it is expected that the unemployment crisis in this country at the end of 2011 will reach 15.2% and in 2012 to 16.4%. At the same time interval, a negative growth of 5.5% and 5.2% respectively in Greece will be experienced. An economist mentioned that the huge budget deficit remains a problem.

Spanish unemployment rose to 2.32%. Published official statistics show unemployment in the country due to the end of the tourism season will increase. Spain's unemployment rate will be highest in the third quarter this year. Spain's debt crisis in the euro area is also implicated three years ago because of the severe downturn in the building industry which is the backbone of its economy. Spain was involved in the crisis of unemployment and tens of thousands of semi-skilled workers in this field joined the unemployed.

Moody's downgraded the credit rating of Italy and mentioned that this is in response to the current debt and economic situation of the country. Italy remains one of the most indebted countries in the Euro Zone.

Euro zone finance ministers meeting in Luxembourg ended without reaching a conclusion on the financial crisis in Greece. Discussions regarding the arrangement of the second aid to Greece and the involvement of the private sector were reported. According to Greek authorities, the country's budget deficit in 2011 and 2012 will reduce but the goals set by the Europe Union and the International Monetary Fund could not be reached.

From a technical perspective: 

As I said in the weekly analysis and expected, the EUR/USD continued to fall. Given the fundamental market conditions and also the market's risk aversion, the main trend of the currency pair is still falling. Having said so, a correction may be due soon after such an extended bearish push. While the EUR/USD is below 1.35, the main trend is bearish and should the currency pair close above this level it is the first sign of change trend.

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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Masoud : Midweek EUR/USD Review 6 Oct 11

Masoud : EUR/USD Weekly Review 2 Oct 11

Hello koala king and folks.

Good day to you.

G20 finance ministers at their last meeting on the stability of the banking system and financial markets around the world agreed that a bold plan is needed. The World Bank and International Monetary Fund IMF after its meeting Friday said in a statement that with regards to the debt crisis in the euro area, they will act decisively to protect the global economy. However there was no specification on whether if more capital will be injected into the world economic system.

Both the richest and most indebted countries in the euro zone again urged more cooperation to save the crisis of the Greek economy. Angela Merkel, German chancellor mentioned that Germany stands ready to assist Greece in anyway possible. In the meanwhile, the Greek parliament passed a new law to obtain property taxes.

Since the beginning of September, with investors worried about the debt crisis in the euro area and the future world economic growth, the US dollar was facing increased demand and prices in the foreign currency exchange market are reflecting that. The US dollar is still considered to be bullish.

The German parliament votes overwhelmingly to help fund the strengthening of the euro area. The vote in Parliament is also seen as a test for German Chancellor Angela Merkel's authority. In the new scheme, Germany will increase the supply of funds from 123 billion euros to 211 billion euros. Having said so, many Germans are opposed to granting financial assistance to countries in crisis such as Greece.

It was reported that Morgan Stanley Bank stated that circulation transactions reflect an unprecedented buying of US dollars and pounds GBP. Data flow transactions which are collected by the bank Morgan Stanley suggested that trading volume in US dollars and pounds GBP in the last week broke the record and has the highest level.

From a technical perspective: 

As I said in the last Midweek analysis and as per expected, the EUR/USD continued to fall. Also this week according to the prevailing fundamental conditions of the market, I believe the currency pair will continue to fall and as long as the EUR/USD is below 1.3750 level, the main trend is bearish. As you can see in the above picture, the EUR/USD after slightly rising and touching line A, it continued to decline. I am still waiting for the currency pair to touch FIBO 261%.(1.3250).

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. 

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Masoud : EUR/USD Weekly Review 2 Oct 11

EUR/USD Weekly Review 1 Oct 11

Good day forex trading koalas.

How is your weekend? Mine is a lazy one. So tired i could sleep all day.

In the previous EUR/USD review we noted the forex gaps were still happening, an indication of market turmoil. Both SMA 20 and SMA 50 were pointing downwards and it was an indication of a bearish possibility. An interesting point to note is that the SMA 200 is flattening too from it's upwards stance. 1.34 might be a strong support. Fundamentally the much speculated Operation Twist by the US Federal Reserve was announced but little fanfare was seen. In the meanwhile, the Euro Zone continued to face the threat of a Greek default and further complications related to the budget deficit crisis.

Technical Analysis

Looking at the EUR/USD chart above we note that the 1.34 line held as a support. Having said so we could see multiple attempts to break the floor and this is an indication of a strong bearish pressure.

SMA 20 = downwards

SMA 50 = downwards

With both SMAs still pointing downwards, the possibility of a continued bearish momentum is high. It is also important to note that the SMA 200 is rounding the top to become downwards soon. As an indicator for long term trend, such a development will further add to the possibility of a sustained bearish momentum.

Watch out for the SMA 20 to act as a resistance and a failure of 1.34 may bring about 1.32/1.3

Fundamental Analysis

This week stocks in Europe posted the largest weekly gain in 14 months. The successful German vote for an enhanced euro zone rescue fund reduced apprehension towards the euro zone debt crisis. What remains to be seen next would be the actual actions to be taken. It was reported that the French President mentioned that the failure of Greece would be the failure of all of Europe and due to economic and moral reasons of a possible global financial fallout, Greece cannot fail. Talks between Greece and various officials from the European Union EU, European Central Bank ECB and International Monetary Fund IMF are ongoing. The Greek Finance Minster was reported to as saying that the next 8 billion euro bailout assistance is "assured". More economists are believing that a cut of the benchmark interest rate will be done soon by the ECB. This may further reduce long term demand for the euro currency.

Over in the US, the Federal Reserve's Operation Twist gets underway as it announced that it will buy and sell $44 billion worth of debt in October in a bid to depress long term interest rates. While most of the US economic data were better than expected, including the below 400 000 unemployment claims, the US Non-Farm Payroll due this coming week should be closely monitored among other important economic data releases.

Trade Safely

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