Euro Bulls On The Move
Posted on June 30, 2008
Filed Under EUR/USD, Fundamental Analysis |
Last night’s Euro 2008 cup final between Spain and Germany could have been an allegory for the tensions currently within Eurozone - good to see nimble footed Spain outplaying a typically dour German side. Germany usually manage to grind out a win, at any cost, but this time creativity and flair won the day - hurrah! Let’s hope Angela Merkel and the ECB took note.
Meantime on in the forex markets the tensions between the dollar and euro continue apace - this week really is “le crunch” Friday’s non farm payroll has been moved to Thursday because it’s America’s birthday on Friday (4th July) and there is an ECB interest rate decision as well. Given the stellar reversal of the euro against the dollar along with hints, winks and nudges from Trichet it would seem to be a foregone conclusion that the ECB will raise rates in order to grind out any future inflation in euroland and ipso facto the euro will continue to rise. Having already had several runs at 1.60 the above scenario would suggest that this ceiling is about to be broken - If only it were that simple.
However, if there is no rate increase then we can expect the euro to fall, the dollar to strengthen and commodities to fall, which will be a relief to us all. So which scenario is it likely to be?
Looking at the charts it is clear that the euro/dollar is range trading between a tad under 1.58 and 1.52 and I can see no reason why this should not continue in the short term, or at least until either Bernanke or Trichet really says (and does) what they mean. I personally hate range trading and lately I have devoted most of my energies on trading this pair using my fixed odds strategy. By trading fixed odds on short time scales I can ignore all the market noise, gossip and chatter and just focus my attention on the charts. This supplies my “trading fix” (if you want to know more send me an email via my main currency website). I know it is possible to trade in this way with a forex broker but in reality only via an ecn broker where there is no dealing desk trading against you and the spreads remain stable. Fixed odds has the added advantage of being tax free!
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