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Forex: Measuring Risk and Euro Crisis in EUR/USD, EUR/JPY Reversals

Forex: Measuring Risk and Euro Crisis in EUR/USD, EUR/JPY Reversals

John Kicklighter, Chief Strategist

The markets had time to digest the new steps the Eurogroup took towards easing the immediate financial burden on Greece. Supposedly deferring the greatest risk to the Euro-area and broader risk trends should have theoretically rallied the euro and risky assets like the S&P 500 and AUDUSD. Yet, EURUSD marked a conspicuous reversal on a failed break of 1.3000 and other investor sentiment-sensitive markets showed little relief. Normally, we would take a negative response to a positive outcome as a sign that the market's are ready to tumble; but there is another factor that is complicating this scenario: participation. For those looking for a strong, market-wide 'risk off' or 'risk on' move through the medium-term; we need to account for this structural market condition. We discuss this and shorter-term trade setups in today's video.

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