The investors are losing their faith in the major European currencies, since they buy the USD in spite the fact that the stock markets keep rising. The correlation between the USD and the stock is usually negative, but these days the USD is strengthening no matter what the stocks do.
Wall Street closed on the mixed territory yesterday but the main indices did not make a significant change, and it seems that the investors are waiting for the large companies to reveal their results for the 4th quarter of 2011.
EUR/USD
The Euro keeps loosing points against the USD day after day. Every time the Euro shows signs for a possible correction, a red candlestick arrives and cut out the Euro's plan. The sellers has an absolute control of the trading in this pair and it looks like that Merkel & Sarkozy's plans for saving the Eurozone, do not impress the investors that continue selling the Euro.
The pair has been moving in an accurate channel since the current bearish session began on November 2011. The price approached the lower boundary of the channel and might correct upwards, but additional break-down might take the Euro down to 1.23.
Today is published the European bid rate, which expected to remain unchanged (1%). The ECB press conference will be on the center and Trichet's outlook regarding 2012 will influence on the traders. Be careful of trading during the announcement.
Yesterday we mentioned that the pair has been moving in a lower-high pattern, but it showed signaled that it was about to correct up. The correction did not occur and the GBP slid aggressively to the support of 1.53, which was the target we set in case the pair would not make the up-correction.
The round number of 1.53 might be a strong support for the GBP, but if it continues the bearish momentum, it can easily slide under it and fall to 1.50. The MPC rate statement later today, will determine the direction of the GBP for the rest of the day.
The Yen is showing an impressive strength against the USD these days and the pair USD/JPY has been resting in the recent three-days, though things looks positive for the Japanese currency.
The strength of the JPY is emphasized against the weakness of the GBP and therefore the pair GBP/JPY is crashing. In fact, we suggested a trade-idea for a short position when the price was 121.5-122, which gained over 350 pips. Now, the price is moving towards 117.0 and a break-down there might slide to 115.0
Risk Disclosure
Trading and the execution of transactions in currencies, commodities,CFD indexes and other financial products with or without using high financial leverage, is speculative trading of high risk and may cause substantial gain or loss proportional to the size of the collateral, up to the total loss of the collateral sum in a very short period. The fluctuation of the prices and rates in the currency markets, commodities, CFD ,indexes and other financial derivatives are often volatile and there is no accurate forecasting as per the size of the change, its direction and the time frame in which it occurs.You must consider carefully and seriously if this type of financial activity fits your needs, your financial resources and personal circumstances. Since the risk of losing some of the invested funds or all the funds in a relative short period is high; it is recommended that you use for that purpose funds which you designated for speculative financial transactions of high risk.
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