Euro Trend
Posted on May 22, 2008
Filed Under EUR/USD, Fundamental Analysis |
As forex traders we often only view currency strength and weakness as figures on a screen, from which we can make or lose money. For us, the worst that can happen is a losing trade, but in the real world it is far worse. Having just returned from a trip to Sicily, the effects are both immediate and real, as shops and businesses try and cope with an ever strengthening euro. Yesterday better than expected German IFO figures (The Information and Forschung (Ifo) Business Climate Index measures the mood of firms in manufacturing, construction, wholesale and retail. The index is derived from a monthly survey of over 7,000 firms where respondents are asked to give their assessments of the current business situation and their expectations for the next six months) is the main reason why the Euro has continued to rise along with an increase in the price of oil.
What is good for German business is not necessarily good for the rest of Europe where a strong currency can be a short cut to poverty. In the short term the euro shows little sign of weakening against the US dollar and we could be looking for a run back towards 1.59 where it could stall yet again. I would try to look for short trading opportunities using tight stops - say at 1.58 with a target of 1.55 rather than try to predict the long side.
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2 Responses to “Euro Trend”
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Morning Anna,
Think I am missing the point here, you feel the Euro may well rise back to 1.59 but you suggest a buy short at 1.58 with a target of 1.55?
Not at all - the Euro could have gone either way but on balance I felt the short trade was more likely to succeed - indeed since my recommendation the euro has fallen to a low of 1.5460. I also mentioned in a previous post that the Cot report was showing a switch to net shorts on the euro.