Is the Euro Headed Down?
Posted by Edward Dy on April 30th, 2008
|
After breaking the psychological level at 1.60 last Tuesday, the eur/usd fell by more than 400 pips. The fact that the Euro did not or could not go beyond 1.60 was more or less expected.
The indicator here is the absence of major option barriers above 1.60. This means that the Euro’s move toward 1.60 was not as strong as its move beyond the realm of 1.50. Come to think of it, the move to 1.60 could even be a near term top.
Photo Credit: Sheldon Pax
On the other hand, the eur/jpy seemed ready for a top, but has since fallen by more than 150 pips and seems to be going down even further.
From the above scenarios, it seems that the US dollar has reached an all time low, but may be recovering soon. But for the euro, this could mean just the start of further losses, and here are three reasons why this is so:
- While waiting for the Federal Reserve interest rate decision, there has been a growing confidence that the Federal Reserve will only cut interest rates by 25bp, but also believe that the Fed will sustain this move throughout the remainder of the year.
- There’s been a change in the FXCM Speculative Sentiment Index. Since 2006, the eur/usd rallied from 1.25 to 1.60. And now, the index has flipped favorably indicating a strong sell signal.
- Currently the eur/usd’s 4th wave correction process is underway; however, support does not begin until the eur/usd has touched 1.4667.
Financial analysis and investment software that combines technical analysis with neural network and genetic algorithms.
Commercial Forex Trading Secrets Revealed
Play to Win $50,000 - Fantasy Stock Trading Game
Forex Trading Courses