News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
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
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • The market’s preferred ‘fear indicator’ shows a persistent uncertainty around the near future. What can our current conditions and history tell us what to expect from the #VIX through the final two months of the year?https://t.co/jlhcFhH4sI https://t.co/zIrEjxqymJ
  • #Stock market performance is considered an important predictor of the economic outlook. What else can it be used to project? https://t.co/ViTMl19TW3 #Elections2020 https://t.co/methLCaBho
  • What are some monetary policies that could affect Gold this quarter? Get your Gold free forecast here: https://t.co/b9XwwYS9uJ https://t.co/8OIZVJnaD6
  • A #Euro reversal off technical downtrend resistance now risks a larger correction in price. Here are the levels that matter on the $EURUSD weekly chart. Get your #currencies update from @MBForex here: https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2020/10/31/Euro-Technical-Outlook-EURUSD-Breakdown-Aims-For-Multi-month-Lows.html?QPID=30472&CHID=9 https://t.co/iVhmCXi9EG
  • We are days away from the US Presidential election and the markets are caught in the vortex. A contested outcome would raise serious volatility for the markets whereas a decisive outcome seems to support bullish $SPX and Dollar views from the market rank. https://www.dailyfx.com/forex/video/daily_news_report/2020/10/31/SP-500-and-Dollar-Forecast-Leads-Global-Markets-with-Elections-Expectations-.html https://t.co/JnJbyu6TRT
  • The future implications of the #Elections2020 may influence $AUDUSD following the #RBA and #Fed rate decisions as Congress struggles to pass another round of fiscal stimulus. Get your #currencies update from @DavidJSong here: https://t.co/soPu0Wefz2 https://t.co/UWsERr2AYh
  • Gold prices declined in the aftermath of bearish technical cues, but a key zone of support was reinforced. $XAUUSD volatility risk is elevated ahead of the #Elections2020. Get your #metals update from @ddubrovskyFX here: https://t.co/gWOxdqk8OL https://t.co/gBMgF0YNjH
  • USD awakens, placing GBP/USD on the backfoot, while EUR/GBP cracks 0.90. Get your #currencies update from @JMcQueenFX here: https://t.co/fndMQJLul8 https://t.co/elz5gNAKrB
  • What are some factors impacting Euro’s forecast this quarter? Get your free forecast here: https://t.co/kpBYVz31Bd https://t.co/7EzMPg9Kqg
  • Emotions are often a key driving force behind #FOMO. If left unchecked, they can lead traders to neglect trading plans and exceed comfortable levels of risk. Read on and get your emotions in check here:https://t.co/eILWbFgHRE https://t.co/DjMdgL5x19
Euro Ambitions to Revive Bull Trend May Be Dashed by Dollar, Crisis Fears

Euro Ambitions to Revive Bull Trend May Be Dashed by Dollar, Crisis Fears

2012-03-23 23:21:00
John Kicklighter, Chief Strategist
Share:
Euro_Ambitions_to_Revive_Bull_Trend_May_Be_Dashed_by_Dollar_Crisis_Fears_body_Picture_5.png, Euro Ambitions to Revive Bull Trend May Be Dashed by Dollar, Crisis FearsEuro_Ambitions_to_Revive_Bull_Trend_May_Be_Dashed_by_Dollar_Crisis_Fears_body_Picture_6.png, Euro Ambitions to Revive Bull Trend May Be Dashed by Dollar, Crisis Fears

Fundamental Forecast for the Euro: Bearish

Congestion was the name of the game last week for EURUSD, and that makes sense when we look at the fundamental backdrop for the pair as well as the weight of the technical levels currently restricting its movements. With the boundary of the larger bear trend holding above (1.3300/3500), there is a higher threshold for generating follow through – something more convincing than a rebound founded on a deferred resolution on the region’s persistent financial troubles and growth-inhibiting austerity drive. There are two fundamental themes euro traders should watch going forward: risk appetite trends and headlines regarding the financial health.

Of these two themes, one can work for or against the euro; but the other really holds potential shock value only for the bears. Over the past few years, concerns surrounding the Euro Zone’s ability to balance its member requirements for trim deficits with healthy growth have replaced the calls to further diversify away from the dollar and into this second most liquid currency. Having crested the most recent swell in the ongoing struggle with Greece’s immediate funding needs met, there is naturally a ‘collapse’ premium that will naturally be worked off. However, the rebound for this particular phase threatens to be more reserved. First of all, this is yet another round in a long series of do-or-die situations. Investors are less susceptible to turn optimistic after so many false starts. In turn, it is easier to spot the next swell as the various threats to stability are easier to see.

With that, the markets will be particularly sensitive to negative headlines that pass the wires; and there are plenty of topics that can trigger bearish sentiment. Surprisingly, the most infamous of the region’s members (Greece) does not pose the greatest threat. Nevertheless, there is plenty of negative press: how to handle bond swap holdouts, the IMF warning the country could have its disbursal postponed if milestones are missed and suggestions that there will be funding gaps going forward.

The markets have grown accustomed to Greek trouble. The true risk likes with the crisis spreading. On one side, we run the risk of seeing the other two Euro Zone members that received bailouts have to return for a second dose of support or demand accommodation similar to Greece. Ireland recently reported a 0.2 percent contraction in the fourth quarter, they are looking to win an extension on their €3.1 billion bailout payment due at the end of the month and there is a chance that they could vote themselves out of the chance to tap the ESM in the future. Portugal is a consistent concern for demanding further accommodation because of its pained growth outlook. Perhaps the most prominent threat is Spain. The recent decision by Prime Minister Rajoy to raise the deficit target for 2012 flies clashes with the EU’s demands. Meanwhile regional financing troubles and the banking sectors’ mispricing of real estate assets could prove a serious problem.

Crisis concerns are always kept at the forefront thanks to too many rounds of trouble within the region and the financial media, but the markets have become somewhat anesthetized to the ‘fat tail’ shocks due to the consideration of so many scenarios. This also curbs the short-term impact as we need a much greater risk present. That said, the current behind risk trends can always leverage a sizable reaction from the market. The S&P 500 continues to charge higher, yet we are still struggling for comfort in the drive. A strong jump in risk appetite could possibly play to the ECB’s hawkish lean, but a natural correction in capital markets could set fire to the euro on fire. – JK

--- Written by: John Kicklighter, Senior Currency Strategist for DailyFX.com

To contact John, email jkicklighter@dailyfx.com. Follow me on twitter at http://www.twitter.com/JohnKicklighter

To be added to John’s email distribution list, send an email with the subject line “Distribution List” to jkicklighter@dailyfx.com.

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

DISCLOSURES