We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Gold
Bearish
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • (Weekly Fundamental Outlook) The medium-term #gold outlook still seems favorable as the #Fed, ECB and more keep rates around 0. Immediate event risk ahead includes the RBA and BoC interest rate decisions, US jobs data and #Brexit talks #XAUUSD - https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/05/30/Gold-Prices-Face-RBA-BoC-ECB-US-Jobs-Data-and-Brexit-Talks.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/m8sRNc4L5H
  • U.K. Eurozone Czech Poland Germany Italy France Spain Indonesia Hong Kong Singapore Japan Unemployment stats: US Eurozone
  • Hello there, traders! Heads up: we have got a data-packed week ahead of us. Here are the highlights: Central bank rate decisions: - BOC - ECB Markit PMI data out of: China US Vietnam Malaysia South Korea Philippines Thailand Taiwan India Turkey (continued⬇️)
  • The European Commission proposed an ambitious recovery fund, containing the key parts of the Franco-German aid package with grants at EUR 500bln and loans at EUR 250bln. Get your $EURUSD update from @JMcQueenFX here: https://t.co/LmIaveRajb https://t.co/LWTBVLIDBf
  • The trio of central banks overseeing the commodity currencies have already cut their main rates to all-time lows. Get your market update from @CVecchioFX here: https://t.co/OSUXrN5P3j https://t.co/3nwDel6e28
  • The tension from March continues to subside, allowing for the $USD to slide to fresh two-month-lows. Get your currencies market update from @JStanleyFX here: https://t.co/bRSRjUqg6Z https://t.co/Q35YpIZEd2
  • López Obrador hopes #USMCA will help tighten trade relationships between the US and Mexico. Get your currencies market update from @HathornSabin here: https://t.co/bZrUKSCGaS https://t.co/MZ7UoiWWRj
  • The $AUD may suffer as relations between Australia and China deteriorate amid dwindling growth prospects. Euro traders will be closely watching progress in talks about a €500b recovery fund proposal. Get your market update from @ZabelinDimitri here: https://t.co/LkEFJViPWY https://t.co/sofO135ElG
  • The US Dollar could rise against #ASEAN currencies such as the Singapore Dollar as US-China tensions seem to escalate. The Indian Rupee is also looking ahead of local 1Q GDP data. Get your ASEAN currencies market update from @ddubrovskyFX here:https://t.co/LkEFJViPWY https://t.co/ZGFaQQ3Hr2
  • The #Euro is the big driver here for DXY as it is 57% of the index. It is rising now and trying to break above the March 27 high at 11147. Get your $EURUSD technical analysis from @PaulRobinsonFX here:https://t.co/6gt3F9LuGP https://t.co/73SaL5AeXD
Euro Falls on France, Italy, Spain Ratings - Further Declines Likely?

Euro Falls on France, Italy, Spain Ratings - Further Declines Likely?

2012-01-14 00:25:00
David Rodriguez, Head of Product
Share:
Euro_Falls_on_France_Italy_Spain_Ratings_-_Further_Declines_Likely_body_Picture_5.png, Euro Falls on France, Italy, Spain Ratings - Further Declines Likely?Euro_Falls_on_France_Italy_Spain_Ratings_-_Further_Declines_Likely_body_Picture_6.png, Euro Falls on France, Italy, Spain Ratings - Further Declines Likely?

Fundamental Forecast for the Euro: Bearish

What a week for the Euro. The single currency plummeted to fresh multi-month lows before surging above key technical resistance. Yet initial calls for a larger reversal proved premature as fresh Euro Zone sovereign credit rating downgrades pushed the EURUSD to new lows. Trading remains difficult amidst such unpredictable shifts in market sentiment, and the week ahead promises similar volatility on any and all changes in news coming out of the Euro Zone.

It seems imprudent to take a strong trading bias amidst such incredibly sharp swings in sentiment, and indeed we advise caution in the week ahead on potentially similar moves. The real question is whether recent deterioration in Euro Zone sentiment will be enough to force the EURUSD pair to fresh lows.

Standard and Poor’s spared almost no one as it downgraded the sovereign credit ratings of major Euro Zone countries. France lost its heralded AAA credit rating, while Italy and Spain both saw two-notch downgrades that leave them at BBB+ and A, respectively. Markets seemed focused on France, but it’s important to note that Italy is now a mere notch above ’Junk’.

One further downgrade for Italy could clearly have a negative effect on market sentiment. Yet perhaps more importantly, many investment funds are barred from holding any bonds below investment grade. Given Italy’s substantial debt load, forced selling of Italian bonds could have substantial effects on broader financial markets.

The immediate fallout from recent S&P downgrades may nonetheless be somewhat limited and short-lived given that traders had been pricing in such a possibility for quite some time now. The most recent CFTC Commitment of Traders report showed Non-Commercial futures traders—typically large speculators—were the most net-short Euro against the US Dollar in history. Commercial traders are likewise at their most net-long on record, and market sentiment is quite clearly extreme. The pronounced Euro downtrend undeniably favors continued lows, but reversal risks are especially high amidst such one-sided positioning.

The clear caveat remains that sentiment and positioning extremes are only visible in hindsight, and we could very well continue lower despite the overhang in short positions. This author has admittedly been warning of a potential bounce for some time now, and calling for a bigger EURUSD bounce proved premature.

Thus we’ll favor Euro declines until we see more clear evidence that price and positioning has recovered from extremes. Relatively limited European economic event risk leaves us trading off of broader market flows. It will be critical to watch early-week trade, as the first trading day often sets the tone for price action through Friday’s close. – DR

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.