Currency Trading - Strategies for the Global Markets
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Graham Maxfield Premium Member Group moderatorThe company name is only visible to registered members.A doubtful equilibrium
Sovereign debt is the woe that hold the world in an uncertain state amidst the growing realisation that Greece could default after so many narrowly avoided close calls. The package that was arrange for Greece at €110bn has only been a relief for a year and already there have been crises talks with which another bailout which could be as high as €120bn. The terms of agreement are set to be discussed this week.
German banks are heavily exposed to Greece and a default will have serious effects on the euro. Should the euro tumble then the purchasing power of commodities and materials will be seriously impeded and will be felt across businesses that are already at breaking point with profitability against record high prices.
The disparity between the Interest rates of Europe and the rest of the world will soften the blow as despite the fundamentals the euro has kept its strength; however there is a question of whether the markets have priced in a default or market reaction is something we are yet to see. The last thing European businesses need is a reduction in purchasing power.
The USA is still feeling the effects of slow growth seen prominently in the disappointing numbers of the non-farm payroll report. The slow growth is continuing to hinder strength in the dollar as the dovish stance on interest rates keeps the value of the dollar low. While this is good for exports, the knock on effect that this has in connection with other currencies can be seen no more prominently than in that with the yen.
Japan is still struggling to lift its economy out of the slow growth that was caused by the tsunami and has left Japan with a reduced production output of over 15%. With the repatriation of assets in order to deal with the crises and the weak US dollar, the Japanese economy will struggle to lift itself out of slow growth and the yen is simply too strong.
The EUR/ USD seems to have found a peak just short of 1.5000 which is not surprising as this is a key price point at which many traders will take off positions at this resistance. It will most likely be the case that significant buying pressure will not push the euro further against the dollar until a break of this level and a test of support is seen. If euro strength does push past this level to be trading above 1.5000 then selling pressure is most likely to come in at 1.5196 and 1.5768 with 1.4926 acting as a shorter term resistance level.
To the downside, bulls are likely to enter the markets at 1.4060. If the level fails to hold at this level which may be the case if fundamental factors cause traders to loose confidence in the euro over the third and fourth quarters, then targets of 1.3719 and 1.3369 are likely to be good key prices levels with which to take off short positions.
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http://fx-knight.com/smForum/index.php/topic,1910.0.html
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The USD/ JPY has seen a range in the last few weeks with the pair finding substantial support at 76.302. The pair tried recently to lift itself out but could not find enough bull strength to keep out of this range and above the 20day exponential average. The downward pressure on the USD/ JPY is like to find support at 78.285 with a ultimate bottom at 72.710.
To the long side, 81.086 is the immediate log term target with 82.968 and 87.077 being key price points for long positions.
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To view the chart visit:http://fx-knight.com/smForum/index.php/topic,1910.0.html
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By
Dean Peters-Wright
Senior Analyst
fxKnight.com
- 20 Jun 2011, 09:38 am
