Euro Take Center Stage On Friday Sell Off. 1.30 Primary Target for EUR/USD.
It's been really amazing on how the Fed influences the world market prices. In the matter of 24 hours after the Fed raised interest rates from 5% to 5.25%, it's totally changed the market sentiment and direction in a total opposite way. The dovish statement made by Ben Bernanke has caused major sell off in the greenback immediately after the rate hike announcement and the sell off has been extended today today. Just in a day's time, the dollar gave back 240 pips to the Euro and 221 pips to the Swiss Franc which was gained prior before the Fed Meeting. I would say these 2 pairs of currency are one of the top winners for the day. For the stock market, majority of the markets from ALL over the world ended higher on closing today. However, markets from China are not doing very well, it might be due to the calling from the new US Treasurer Secretary Henry Paulson for stronger yuan against the dollar to cover the ever-negative US trade deficit. Another supporting reason is that China may raise interest rates to cool down the over-heated economy in the country.
Today's report for the Eurozone came out supportive for the currency as European executives and consumers confidence jumped to the highest in more than five years in June and inflation was stronger than expected, evidence of an expansion that is gathering momentum and may prompt the region's central bank to accelerate its interest-rate increases. The European Commission's index of economic sentiment in the dozen euro nations rose to 107.2, up from 106.7 in May and the highest since March 2001. Consumer prices in the area gained 2.5 percent, the same as the previous month.Confidence and price pressures are increasing as growing exports support corporate investment, which in turn is generating jobs. That gives the European Central Bank reason to add to three interest-rate increases since early December to at least 3.25% by the end of the year. For the USD data, Consumer spending in the U.S. rose 0.4 percent in May, the smallest increase in three months, and inflation held above the Federal Reserve's preferred range noting a considerably unwillingness to make personal spending due to the mainly higher consumer prices and energy prices. BUT core PCE remains 0.2% in May unchaged from the previous month. This is what the Fed usually watches for inflation signals whether to persue higher interest rates in future. For the Chicago PMI which was reported surprisingly strong last month dropped significantly lower this month after manufacturing and the economy are becoming more dependent on exports and business investment as sources of strength because higher fuel costs and interest rates are taking a bite out of consumer spending and probably some correction from the high figures last month. The business barometer declined to 56.5 this month from 61.5 in May. A reading greater than 50 signals growth. As I've expected, Americans were more confident in June for the first time in three months as a decline in gasoline prices left them more to spend on other goods, accoding to the Michigan's Consumer Confidence Index survey in the month of June. The University of Michigan's final index of consumer sentiment increased to 84.9 from 79.1 in May. The gain in confidence may help temper a decline in consumer spending that's forecast to curb the nation's economic expansion. The Federal Reserve raised interest rates for a 17th straight time yesterday, saying an apparent moderation in economic growth hasn't ended the risk of inflation. The higher confidence still failed to boost USD in anyway.
I'm expecting the EUR/USD to retest 1.2980 which was reached in April after the Fed raises interest rates suggesting that the committee might pause at one or more upcoming FOMC meeting. The time frame would be within 2 weeks time, if 1.2980 is retested, I would expect the major resistance at 1.30 to break down after 2 failed attempts previously. For my trades, I'm acting more aggresively on the EUR/USD to make as much profit as possible to bring back my margin due to the heavy losses a few days ago. I'm currently holding 7 EUR/USD trades and 3 negative USD/CHF to handle. I will make a change this time and let the profit run till the end of the EUR/USD rally. I would step protective stop loss to secure the profits in case the unexpected happens. Who would know what's gonna happen anyway?
=============
Existing Trades
=============
Long EUR/USD @ 1.2590
Long EUR/USD @ 1.2620
Long EUR/USD @ 1.2670
Long EUR/USD @ 1.2720
Long EUR/USD @ 1.2770
Long EUR/USD @ 1.2820
Long EUR/USD @ 1.2960
Long USD/CHF @ 1.2480
Long USD/CHF @ 1.2501
Long USD/CHF @ 1.2520
I'll continue my aggresive trades placing in this rally and if the prices reached 1.3100 for EUR/USD, I would be able to recoup at least 80% of what I've lost before. Bringing me back to where I've started. After these losses, I've learnt some valuable experiences in trading making me feeling more confident in the currency trading. As it's always been one of my discipline in trading, never be afriad to make mistakes and always learn from it and always cut losses to live to trade another day.
Today's report for the Eurozone came out supportive for the currency as European executives and consumers confidence jumped to the highest in more than five years in June and inflation was stronger than expected, evidence of an expansion that is gathering momentum and may prompt the region's central bank to accelerate its interest-rate increases. The European Commission's index of economic sentiment in the dozen euro nations rose to 107.2, up from 106.7 in May and the highest since March 2001. Consumer prices in the area gained 2.5 percent, the same as the previous month.Confidence and price pressures are increasing as growing exports support corporate investment, which in turn is generating jobs. That gives the European Central Bank reason to add to three interest-rate increases since early December to at least 3.25% by the end of the year. For the USD data, Consumer spending in the U.S. rose 0.4 percent in May, the smallest increase in three months, and inflation held above the Federal Reserve's preferred range noting a considerably unwillingness to make personal spending due to the mainly higher consumer prices and energy prices. BUT core PCE remains 0.2% in May unchaged from the previous month. This is what the Fed usually watches for inflation signals whether to persue higher interest rates in future. For the Chicago PMI which was reported surprisingly strong last month dropped significantly lower this month after manufacturing and the economy are becoming more dependent on exports and business investment as sources of strength because higher fuel costs and interest rates are taking a bite out of consumer spending and probably some correction from the high figures last month. The business barometer declined to 56.5 this month from 61.5 in May. A reading greater than 50 signals growth. As I've expected, Americans were more confident in June for the first time in three months as a decline in gasoline prices left them more to spend on other goods, accoding to the Michigan's Consumer Confidence Index survey in the month of June. The University of Michigan's final index of consumer sentiment increased to 84.9 from 79.1 in May. The gain in confidence may help temper a decline in consumer spending that's forecast to curb the nation's economic expansion. The Federal Reserve raised interest rates for a 17th straight time yesterday, saying an apparent moderation in economic growth hasn't ended the risk of inflation. The higher confidence still failed to boost USD in anyway.
I'm expecting the EUR/USD to retest 1.2980 which was reached in April after the Fed raises interest rates suggesting that the committee might pause at one or more upcoming FOMC meeting. The time frame would be within 2 weeks time, if 1.2980 is retested, I would expect the major resistance at 1.30 to break down after 2 failed attempts previously. For my trades, I'm acting more aggresively on the EUR/USD to make as much profit as possible to bring back my margin due to the heavy losses a few days ago. I'm currently holding 7 EUR/USD trades and 3 negative USD/CHF to handle. I will make a change this time and let the profit run till the end of the EUR/USD rally. I would step protective stop loss to secure the profits in case the unexpected happens. Who would know what's gonna happen anyway?
=============
Existing Trades
=============
Long EUR/USD @ 1.2590
Long EUR/USD @ 1.2620
Long EUR/USD @ 1.2670
Long EUR/USD @ 1.2720
Long EUR/USD @ 1.2770
Long EUR/USD @ 1.2820
Long EUR/USD @ 1.2960
Long USD/CHF @ 1.2480
Long USD/CHF @ 1.2501
Long USD/CHF @ 1.2520
I'll continue my aggresive trades placing in this rally and if the prices reached 1.3100 for EUR/USD, I would be able to recoup at least 80% of what I've lost before. Bringing me back to where I've started. After these losses, I've learnt some valuable experiences in trading making me feeling more confident in the currency trading. As it's always been one of my discipline in trading, never be afriad to make mistakes and always learn from it and always cut losses to live to trade another day.
posted by 4xTrader at
1:05 PM
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