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. See our updated Privacy Policy here.

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
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Bullish
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
Bullish
GBP/USD
Mixed
USD/JPY
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
More View more
Real Time News
  • 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/pSeSiNnmHe
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/reRmDe1Ksp https://t.co/iVOEuK40rn
  • Implementing a trading checklist is a vital part of the trading process because it helps traders to stay disciplined, stick to the trading plan, and builds confidence. Learn how to stick to the plan, stay disciplined, and use a checklist here: https://t.co/SQUCCYRCIk https://t.co/ltEO5dpKux
  • WTI crude oil is currently trading up against major resistance via the 2019 and 2020 highs within the confines of a channel; something has to give. Get your market update from @PaulRobinsonFX here: https://t.co/MO9foRjm2y https://t.co/YhBFdvZDEb
  • The Dow Jones and S&P 500 outlook appears bleak in the near term as retail traders increase their upside exposure. At the same time, these indices confirmed bearish technical warning signs. Get your market update from @ddubrovskyFX here:https://t.co/fKCHELbOxo https://t.co/eVDwmFTaIg
  • Use this technical analysis pattern recognition skills test to sharpen your knowledge: https://t.co/Qgz89PTxnu https://t.co/8B8hqHahm1
  • The US Dollar finished off an eventful week after CPI and retail sales injected volatility into markets. FOMC is now in the Greenback’s sights as taper talks linger. Get your market update from @FxWestwater here: https://t.co/MHi0lfQ93j https://t.co/4XetwYAaNd
  • Get your snapshot update of the of market open and closing times for each major trading hub around the globe here: https://t.co/BgZLFljIhZ https://t.co/ZZRLV0Wkea
  • The Nasdaq 100 index has likely formed a bearish Gartley pattern, which hints at further downside potential. Negative MACD divergence on the weekly chart suggests that upward momentum may be fading. Get your market update from @margaretyjy here: https://t.co/GkMEkVA7YR https://t.co/E1vyCMVt6K
  • Struggling to define key levels? Floor-Trader Pivots assist traders in identifying areas in a chart where price is likely to approach and can be used to set appropriate targets, while effectively managing risk. Learn how to use this indicator here: https://t.co/Ye4m1G4lMu https://t.co/2TpkkUu7Hg
Euro Avoids Stimulus-Led Collapse but a Strong Rally Unlikely

Euro Avoids Stimulus-Led Collapse but a Strong Rally Unlikely

John Kicklighter, Chief Strategist
Euro_Avoids_Stimulus-Led_Collapse_but_a_Strong_Rally_Unlikely_body_eur.png, Euro Avoids Stimulus-Led Collapse but a Strong Rally Unlikely

Euro Avoids Stimulus-Led Collapse but a Strong Rally Unlikely

Fundamental Forecast for Euro: Neutral

- The ECB has signaled a significant monetary policy change of a return to stimulus

- Yet, short-term Euro-based rates continue to rebound, taking the Euro into a dangerous fundamental confrontation

- If you think an ECB stimulus return will eventually weigh the euro, consider a short Euro Currency Basket

It was a sense of relief that rallied the euro this past week. Fear that the ECB was building on an aggressive easing policy had bulls on edge and worked in a discount for the currency. After it became clear at this most recent meeting that November’s surprise rate cut would not be immediately followed by a new stimulus program, the shared currency responded with a ‘relief rally’. Yet, such moves in their very nature are limited in scope. A continuation move by the euro depends on tangible fundamental appeal that will draw capital into the region. Furthermore, a bull – or bear – run will be increasingly difficult to maintain as we have only two full trading weeks left in the year.

If we were to benchmark our outlook for the coming week to the Euro’s performance last week, our expectations would be artificially inflated. After the Eurozone’s October inflation report plunged to a four-year low (Oct 31), the currency pitched into a sharp decline as speculators interpreted the data as the missing ingredient – along with tepid growth, fading loan growth and near-term exit from bailout programs – to encourage the central bank to reverse its shrinking balance sheet. Those expectations / fears were proven correct on November 7 when the group unexpectedly lowered the benchmark lending rate 25 bps to 0.25 percent.

A rate cut – especially when already near the zero bound – offers limited economic benefit and detrimental currency impact. Follow through on the selloff was limited as the focused shifted to the more effective tool for currency manipulation: stimulus plans. Expectations of an immediate adoption of a new LSAP (large-scale asset purchase program) or the like so soon after the rate move were limited. As such, the euro’s slump against the dollar, pound and franc cooled quickly. It was that modest premium that remained on the off-chance of an aggressive ECB move that was promptly covered when President Draghi kept the status quo.

We should not take last week’s developments to mean that the European Central Bank will continue to allow their balance sheet shrink with the repayment of their two large bank-based stimulus programs (LTRO1 and LTRO2) and thereby boost the region’s yield and currency. Given the slow recovery of economic activity, slide in lending, appearance of disinflation and rising exchange rate for the Euro-area; a stimulus shift would be a likely preemptive and corrective move. Yet, the important consideration for our immediate trading purposes is that it won’t occur before the year-end liquidity drain.

By the week of the 23rd, the bulk of business, fiscal and investment decisions will be put on pause until the new year. That removes an impetus for significant trades but it also removes the risk of volatility – which is typically detrimental to the prevailing trend. In response, we have seen one-month EURUSD implied (expected) volatility collapse to its lowest level since August 2007.

Low perceived risk will work as a curb to most bearish scenarios related to the scheduled event risk for the week ahead. At the top of list this week is the Eurozone Finance Ministers’ meetings. Monday’s gathering in particular is expected to return to the topic of Greece and its bailout conditions following recent debate over their progress.

Other fundamental fodder to keep track of can be separated into monetary policy cues and traditional economic data. For the latter, Eurozone investor sentiment, a Bloomberg-measured Economic survey, and German trade figures. Otherwise, the ECB monthly report and two scheduled speeches by ECB President Draghi will update rate watchers on their stimulus expectations. – JK

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

DISCLOSURES