Sharp US dollar fall

As I wrote yesterday, it is far more important to pay attention to what key financial people (like Ben Bernanke or Mr. Draghi) say during press conferences than what they present on paper. Yesterday was a clear example of that. When FED meeting minutes from June were released nothing really happened. US dollar went down slightly, but recovered in fifteen minute time. However, very strong pressure for the US dollar came when the FED chief Ben Bernanke started delivering a speech at a press conference. That’s when dollar plummeted. In some pairs it lost over three hundred pips in less than twenty four hours. 

This suggests that the downtrend in the greenback may continue till the end of the week. For the time being Euro remains one of the strongest pairs and should be bought on tips till other important Forex news data is released that could revert its’ trend. The Bank of Japan governor Kuroda also slightly surprised the markets by saying that the Central Bank of Japan may not increase its’ stimulus. It indicates that Japanese Yen may finish its’ downtrend and start going up very soon. Although fundamental data from Europe is not very encouraging, Euro still has potential to go beyond its’ recent highs of 1.3400.

Which falls Euro or Pound?

As two very important events are scheduled for today one may wonder which currency will fall and which one will rise. United Kingdom has to release Forex news first. Bank of England will deliver their decision about interest rates and Bank chief should also deliver some speech about central bank’s financial policy. I am bullish towards Pound and bearish towards Euro at the moment. However, I will concentrate more on gbp/chf and gbp/nzd pairs. These look most attractive at the moment. Pound Franc pair has to clear 1.4500 level to confirm bullish bias. I buy above that price area. 

Euro, on the other had looks kind of bearish. I am looking at eur/nzd now and the technical structure of it is very bearish. So, it looks weak against commodities and today’s event might change the course for Euro against commodities, but nobody knows what will happen to eur/usd, eur/jpy and eur/gbp pairs. Euro US dollar pair seems to be sitting on support as well as gbp/usd pair. So, it alludes to the idea that the greenback might fall. I also do not rule the chance of Euro forming double bottom patterns in commodity currencies on hourly charts. Whatever happens, be sure to be on the same side as the market. 

See you tomorrow with more updates.

Will Euro rise or fall on CPI

So, the last day of the week and the last day  of the month has come. Interesting mixture! What do I expect for today. Now, you must know that I like going with the flow and wherever market takes me. If the news pushes Euro up, I go up. If it pushes Euro down, I will go down. Be prepared to trade in both directions by using limit orders. 9:00 GMT is approaching very fast. Two hours left.

I was inclined to think that Euro will fall by the end of the week, but looking at price action it is not likely. Both eur/usd and even eur/gbp look pretty strong now. So, let us follow the rule of following market first. And let us leave our opinions for the next time.

And do not forget that news from Canada will also have serious impact on the market. That is due at 12:30 GMT.

Bullish fundamental facts from Europe

ECB expressed its’ ‘sincere’ desire to address the European crisis and is again willing to do anything it takes to stabilize the region’ economy. These comments after interest rates announcements are very important as they usually give momentum for currencies at least for a few weeks. These are periods of time when a trader can accumulate a big position in a currency that is about to strengthen and keep it for a few weeks to make nice profits. That is exactly what happened in eur/usd or eur/jpy pairs. These macroeconomic news put Euro back on its’ uptrend and this tendency of Euro strength may continue for a few weeks.

I will repeat myself again that one should only trade in the direction of the main trend and never against it. So, after ECB and BOE announcements of interest rates have been made one can expect Yen and US dollar to weaken and Euro, Pound and commodity currencies to strengthen. Just be sure not to risk too much, nor to overtrade. These things never increase your profits. Vice versa, it impedes you to take the best possible trades that are on the table. Stay patient and try adding to your position on dips.

Nonfarm payrolls price action disappoints

Nonfarm payrolls data failed to create significant price action moves in most currency pairs. In fact, Friday was very calm in Forex market. Only scalpers could have benefited from the event. Other than that it was a pretty boring day. It is quite unusual for Fridays that often have huge market swings in most currency pairs and sharp reversals after weekly moves. 

However, it does not mean the piece of news will not have impact at all. Reactions often come after a day or in the beginning of a new week. The data that came out was slightly below market expectations, but it was still quite good. So, we have yet to see how big market dogs decide to push various currency pairs on Monday. 

I keep to my position that Euro will collapse soon and I think the move down has already started. Important support level has been broken. We do need some announcement from ECB or FED for the fall to accelerate and I guess it should come this month. It could be done during the announcement when interest rates are announced. I think it will be ECB head who will make a bearish stance against Euro.

Let us wait and see what happens this week. See you soon.

When markets neglect news

You should not be surprised to see how often the market neglects news. It is very good. Why? Because it shows that there is a direction in the market and a strong trend. If the market is going up and some negative piece of information reaches traders they might take partial profits, but then buy quickly the security back at the previous support level. I have just seen it happen on eur/usd pair. Just look at the chart to see what a powerful reversal the pair saw yesterday and how it is recovering its' losses today.

I saw this happening hundreds of times. The tendency is strong. They same can be said about gbp/usd pair recently. Retail sales were down today (the report says), but pound traders refuse to sell the cable. They shrug the news off. They believe it is still right time to stay with the move till all negativity about US dollar is exhausted. I hope it will happen soon, but it may take up a few weeks for the market mentality to change from bearish to bullish.

Ok, enough for now. Hope to see you soon. Don't forget to buy presents for your loved ones.