Masoud : EUR/USD Weekly Review 7 Nov 11

Hello koala king and folks.

Good day to you.

Member countries of G20 leaders had a meeting in Cannes and had an agreement to implement a plan to increase economic growth and to bring about a balance in the global economy. Nicolas Sarkozy, French president at a news conference at the G20 meeting said: "We will fight to defend Europe and the euro." He also said that the 20 members have agreed to increase the IMF's financial resources but the details are to be finalized in February. The increase in IMF resources is a positive step to help solve the economic crisis in the euro area. However it is still not known where the resources will be deployed. Countries like America and Great Britain have emphasized that this will not help. Mr Sarkozy also said France and Germany want to determine the tax for foreign currency transfers and both countries hope that this tax will be implemented in 2012.

Mr Barack Obama, America's president said that they welcome the decision by China to increase yuan flexibility in the rates. America's President added that the increased flexibility of the yuan rate is something that was hoped for a long time and it is something that is a vital step in increasing the economic growth. 

The Greek Prime Minister said the plan to hold a referendum on the Europe Union financial aid to Greece will be withdrawn.

The new European Central Bank ECB chief Mario Draghi in the first meeting of the Council of Europe decided at the meeting that to help solve the debt crisis in the euro zone, interest rates were to be reduced from 1.5% to 1.25%. Mario Draghi told reporters that the economic outlook is still surrounded by many uncertainties and exposed some serious risks. So the hope to achieve the forecast of GDP growth will not be in 2012.

Despite the slow economic growth of America, the US Federal Reserve announced after a two-day meeting that the reserve's current monetary policy continues. Thus the policy makers with 9 votes in favor out of 10 votes kept interest rates unchanged and it's probably until mid-2013 before the between zero and 0.25% interest rate is charged.

On Friday the most important economic news, the US NFP is released and it was worst than expected. However the unemployment rate is 0.1% lower than the previous period to reach 9.0%.

From a technical perspective:

As you can see in the above picture, the EUR/USD is located within an bullish channel. On the other hand, the range of 1.3680 is a strong support. In my opinion, as long as the currency pair is above 1.3680, the main trend is upward. The first target is 1.40. If the EUR/USD breaks below the bullish channel and close below 1.3680, it probably will come down to 1.34.

Have a great weekend.

Masoud.

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Masoud : EUR/USD Weekly Review 7 Nov 11

EUR/USD Weekly Review 6 Nov 11

Good day forex traders.

Having a good weekend? It is slightly overcast for me and i miss the warm sun!

In the previous EUR/USD review, we noted that the bullish momentum continued and had since brought the currency pair higher. It faced 2 strong technical resistances which are the 1.42 region and the SMA 200. The 2 cents gain by the currency pair was believed by many to be too fast and some traders were looking out for a technical bearish correction. Fundamentally the markets were encouraged by recent developments such as an agreement to boost the Euro Zone rescue fund to 1 trillion euros and the persuasion of bondholders to take 50 percent losses on Greek debt.

Technical Analysis

Observing the EUR/USD chart above, the strong resistances of 1.42 and SMA 200 mentioned last week did fulfill. This call for a I LOVE IT WHEN MY CHART WORKS :) moment !

SMA 20 = Flattening

SMA 50 = Flattening

After a sharp dip which erased the 2 cent gain and more, the currency pair is settling into a technical consolidation for now. SMA 20 and 50 are both flattening and this suggests a lack of sustained momentum. An interest thing fact to note is that the SMA 200 which is used to suggest long term momentum is slowly round a top.

Fundamental Analysis

In a move that left many analysts and market experts baffled, Greek Prime Minster George Papandreou decided to call for a referendum on Monday on the latest EU bailout deal. Widely believed to be the direct cause of the sharp dip in the euro value, the markets took this very negatively. Greece is in a very crucial situation and the decision to let largely disgruntled citizens decide on the bailout is considered by many questionable, dangerous and perhaps irresponsible to the global financial community as a whole. This also damages the credibility of the European Union as this would leave decisions already made in limbo.

The move by the European Central Bank to cut the euro interest rate also lowered the confidence on the euro currency as signals were given that it is believed that the euro zone is heading towards a mild recession. Italy, having the second largest debt in the euro zone increasingly comes under fire as concerns regarding an uncontrollable debt crisis continues to escalate.

While the Greece prime minister did signal that a referendum won't be called after all later in the week, the damage to credibility and sentiments was already done.

Over in the US, a worst than expected gain in jobs highlighted the less than desired painfully slow growth of the American economy. 

Besides the usual economic releases, the focus next week would probably be the aftermath of the G20 meetings and the continued developments in the Euro Zone.

Trade safely as i foresee continued stormy waters ahead! Proper money management is a must.

Trade Safely.

Related Forex Articles from the Koala Forex Training College.

• A low interest rate and it's effect on the currency
• Proper money management is important

EUR/USD Weekly Review 6 Nov 11

Head and Shoulders Chart Pattern

Good day forex traders.

Welcome to another forex education article. Today we will touch on a popular technical analysis chart pattern, the head and shoulders.

The head and shoulders is a trend reversal indicator and many believes that this is one of the more reliable pattern. 

Looking at the chart above, we can see the characteristics as follows:

• An attempt to drive bullish momentum known as the left shoulder
• Another drive of bullish momentum that succeeds in extending the price further up. This is known as the head
• A last bullish attempt which fails, resulting in a lower peak and then a drop below the neckline

Typical targets include the distance between the neckline and the highest peak ( the head ).

Trade safely.

Head over to the Koala Forex Training College for more forex related articles!

Head and Shoulders Chart Pattern

Masoud : Midweek EUR/USD Review 2 Nov 11

Hello koala king and folks.

Good day to you.

Mario Draghi on Tuesday begins his work as chairman of the European Central Bank ECB. Mr Trichet for the first four years of his career had a peaceful tenure and in the next four years, was involved in the storm of the debt crisis. The new chairman will begin work in a crisis situation. Will the policy of the ECB change? Mr Trichet said: "We want to maintain their credibility, because the actions and policies on interest rates continue. We can not and will not replace the government. "

A stock market expert said: "We expect more or less that in the central bank's next meeting in Europe, similar policies should be adopted. However interest rates may be cut from 1.5% to 1.25%." It is also expected that the ECB will continue to buy bonds of Euro Zone countries to prevent the rise in bond prices.

The Greek government's decision to hold a referendum on the acceptance or rejection of the new financial aid package caused the decline of stocks in the stock markets of Europe and the world. One economist said: "If the people of Greece in the referendum votes no for the Greek rescue plan, this means leaving the euro zone. "

From a technical perspective: 

The most important economic news will be released tomorrow and Friday and it will probably determine the main trend of the EUR/USD. The currency pair is now in a complicated situation and the best decision for the remaining two days is probably to stay away from trading and just watch the charts.

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 2 Nov 11