Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Euro Rally Likely to Reverse

Currencies / Euro Dec 21, 2015 - 11:28 AM GMT

By: Richard_Cox

Currencies

As we move into the end of this year, we have seen some surprising moves in the currency markets that have likely taken many traders by surprise.  Perhaps the best example here is the shorter-term rally in the EUR/USD, which has quickly risen to near important psychological levels at 1.10.  This commonly traded pair has spent most of its recent activity roughly 5 big-figures below this area, so the it is difficult to argue against the fact that these moves have been substantial. 


But when we look at these moves, there is now a serious disconnect between the fundamental backdrop and the technical price activity.  If anything, this should raise some serious red flags for forex traders and it is more than likely that we have see all we are likely to see in this latest rally in the EUR/USD.

Chart Outlook:  EUR/USD

Chart Source:  FiboGroup

The first factor to consider is the idea that the European Central Bank has been quoted as offering support for new quantitative easing programs for the Eurozone.  This might be surprising to some, as the region’s sovereign debt crisis has largely receded from the headlines.  But the reality is that most of these problems still exist and the ECB is currently looking for ways to add stimulus to the economy.

If this turns out to be the case, it would be a highly bearish event for the Euro and it can be argued that the primary beneficiary in this type of scenario would be the US Dollar.  This means that we are headed for much lower prices in the EUR/USD as we start trading in 2016. 

Going forward, traders will need to continue monitoring the pair on any approach of 1.10 to see how the rest of the markets react.  More than likely, we will see failures in this area but the overall bias starts to reverse if we do see an upside break of 1.10.  So this is the critical area to watch.  The broader expectations is still for failures here, and if this does occur the long term projection is for the EUR/USD to reach parity for the first time since the inception of the Euro itself.  The ECB will have a lot to say with whether or not these expectations take place, and any further indications that the Eurozone is in need of additional monetary stimulus will more than likely lead to broad weakness in the Euro against several major currencies. 

By Richard Cox

© 2015 Richard Cox - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in