Tag Archives: euro

USD/EUR Implications

By Biiwii

Our pals at NFTRH.com noted the move in USD/EUR, with the FOMC acting as an accelerant to already likely short-term events.  We, I mean they :-) also babbled a bit about the gold miners.

But the following chart of hedged Europe fund HEDJ and three unhedged Euro items shows why I got rid of the way over crowded ‘currency hedged Europe’ trade.  If a Euro bounce and USD drop were likely, that hedge no longer made sense.

Note HEDJ negative while EZU pops.

I currently hold the last two items in the panels below per ongoing analysis about European exporters (a big pharma and a diversified industrial/manufacturer).  So far so good.  Not sure yet if I am going to take these profits.  I have to run, but need to think about the markets tonight (and I am sure NFTRH will have an update in the morning).

hedj

Europe Fights Lower Prices

By Biiwii

The European inflation rate is “calculated using the weighted average of the Harmonised Index of Consumer Price [HICP] aggregates” according to TradingEconomics.com.  That is a fancy way of saying the things people pay for, including the things they need on a daily basis.

Here is the dreaded deflation (of consumer prices) that Europe is fighting.  Like the US before it, Europe is operating on a plan that would boost prices (i.e. the effects of inflation) higher so that people participating in the financialized economy can benefit from rising equities (as we first projected in Q4 2014) and the regular people can, well… get screwed (USA style).

euro.inflation

Welcome to the European ‘me too’ QE play!

Yesterday the Euro boinked our target of 105 [1.04935] and all seems to be going according to plan.

euro

But the play (dollar bull, euro bear) is getting extreme now.  Extremes can persist but they are what they are, defined as “reaching a high or the highest degree; very great”.

Let’s just assume the extremes have not yet reached the highest degree.  That does not mean the risk vs. reward to a stance in line with current trends is not extreme.  It is.  Time is the thing.  Trend followers who momo mature trends and go on autopilot always get burned sooner or later.

USD at 11yr High vs. Euro

By Elliott Wave International

Market insight: U.S. Dollar at 11-Year High Against Euro

And why now may not be the best time to bet on the greenback

Editor’s note: You’ll find a text version of this story below the video.

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On March 4, we spoke with Jim Martens, our Chief Currency Strategist. His Currency Pro Service is participating in our Pro Services Open House, a free week-long event that starts next Tuesday at elliottwave.com.

Elliott Wave International: Jim, it’s a good time to talk about currencies, because the euro has just touched an 11-year low against the dollar. Did you ever think you’d live to see this day?

Jim Martens: Did I ever think I’d live to see this moment… Well, back in mid-2011, when EURUSD was trading near $1.50, we started talking about the upcoming retest of $1.1876, the 2010 low. We were convinced that the rally from that level was a correction — so EURUSD would ultimately fall back to it. It took a while to get there because what followed was a wide-ranging sideways consolidation in EURUSD — a triangle, in Elliott wave terms, an overlapping pattern labeled ABCDE that you see on this chart:

That triangle ended in May 2014 with EURUSD almost hitting $1.40. From that point we had been expecting a move below $1.1876 — and we had lower targets, as well. Most of them have been hit, and the interesting thing is that now, all of a sudden, the idea of the dollar/euro parity is becoming popular. Someone at Goldman recently talked about parity by the end of 2017.

Elliott Wave International: Do you think we’ll see parity?

Jim Martens: Well, in 2008-2009, we spotted a three-wave rally in EURUSD from 2000 to 2009 — and we classified it as a correction. That, again, suggests that the euro will eventually revisit the lows we saw back in 2000:

But maybe not just yet. The current timing of the “parity” talk in the media is key. It’s interesting that we see it now, after a huge decline. This is very typical! At major turning points, sentiment is supposed to be extreme. There is a reason why extreme sentiment signals a turning point: First the trend gets popular, then it becomes too popular, then there is no one left to buy (or sell).

But the markets are doing what they are supposed to be doing: inflicting the most pain on the most number of people. The majority always gets caught on the wrong side at big reversals. Always. For me, the news of the public piling into a trend is another snapshot of the market sentiment. That’s useful information. Markets fool the most number of people at the most unexpected moments, but by tracking sentiment — and the news — you can prepare yourself.

The key is, just because the environment is right for a turn doesn’t mean there is evidence of the turn. Wave analysis has built-in indicators that give you that evidence, and you have to wait until you see it — before you act.

What separates Elliott wave fans from the rest of the public is that the public has no basis for determining when the trend may be over. In fact, the longer the trend continues, the more people join in — and the more committed they become. But right now is not the time to stay committed to your EURUSD shorts.

Elliott Wave International: Thank you for the insights, Jim.


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This article was syndicated by Elliott Wave International and was originally published under the headline Market insight: U.S. Dollar at 11-Year High Against Euro. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

USD and Euro

By Biiwii

I’ll be the first to admit I’d have expected a correction in the US dollar by now.  Don’t get me wrong, NFTRH was on the fledgling USD rally last summer when it was still considered by many to be just another beaten up combatant in the currency wars.  But in thinking it had gone too far on over bullish sentiment, I was wrong in January.  Indeed, as noted a couple weeks ago in NFTRH 331“I continue to be proven wrong in expecting the US dollar to correct. Further, at this juncture the weekly chart pattern looks more like an over bought consolidation than a top.”

Moving on, the consolidation worked off the over bought situation by daily charts (weekly remains over bought) and today USD is making a new high.

usd

As for the Euro, the monthly works best to see where this thing may be headed.  As noted in NFTRH 332“Euro has failed to bounce by shorter-term charts and so the monthly is back in play with the lower channel line beckoning.”

With Uncle Buck’s break upward, this still looks to be the case.

euro

O’Neill: Why the US is Not as Strong as You Think

By Biiwii

From CNBC (hey look, they have some good content… it’s not all mindless, after all).

Jim O’Neill on the Swiss Franc, the Euro and the US economy…

O’Neill: Why the US is not as strong as you think

Euro Bulls May Soon Have Their Day in the Sun

By Elliott Wave International

Euro Bulls May Soon Have Their Day in the Sun

Our “Pro Service Outlook 2015″ FREE video event introduces you to the near- and long-term forecast for the world’s most popular FOREX markets — and so much more

By Elliott Wave International

As the euro clings to the guardrail of a 7- (no, wait) 9- (Doh! there it goes again) now 11-year low, debate over the future of the eurozone’s currency rages on. And in the mix, the ultimate four-letter FOREX word just reared its ugly head: PARITY.

“The euro is likely to reach a 1-1 ratio with the dollar for the first time since 2002.” (Feb. 2, Wall Street Journal)

Amidst the flurry, we’d like to focus your attention on another word — CLARITY — and invite you to take an objective step back and evaluate why the euro is where it is today.

First, you have to go back to the beginning of the euro’s dramatic sell-off, to the early part of last year. At the time, the euro was orbiting a 2.5 year high against the U.S. dollar having soared 15% from its 2012 bottom. The strongest thing we remember about this time, though, was how certain mainstream analysts were in the euro’s ongoing upside potential.

There were, after all, plenty of “fundamental” reasons to embolden the bullish claim, such as: strong eurozone economic data, growing demand for the euro’s perceived safety, and most of all, an accommodative monetary policy by the European Central Bank.

In March 2014, ECB President Mario Draghi gave the ultimate green light to euro bulls: Draghi called the eurozone economy an “island of stability,” and foresaw no need for radical, currency-debasing rescue efforts such as rate cuts or quantitative easing. Here, these news items from the time set the scene:

Continue reading Euro Bulls May Soon Have Their Day in the Sun

Euro, Gold & Crude Oil

By Elliott Wave International

[edit] Since we are on the subject, I wanted to pass on this simply poetic quote from EWI’s Steve Hochberg.  I read it and smiled ear to ear…

Everyone “knows” the [Euro] cannot possibly rally with the ECB printing money and global sovereign interest rates at essentially zero. Or can it? Currency moves often create great Elliott waves because in 2015 the very nature of a currency is amorphous. None are rooted to anything tangible, such as gold. They are simply “quotes” relative to other currencies and therefore a manifestation of ephemeral states of mind. The collective changes in states of mind are not random: they are patterned according to the Wave Principle model.

He then goes on with his forecast for USD and Euro, but I wanted to highlight this because he just spoke my language perfectly (better than I could, actually), aside from the Elliott Wave stuff.

Outlook 2015: New Perspectives on Euro, Gold & Crude Oil

Experienced traders say that sometimes, just 2 or 3 good trades make their entire year.

True: If you get in early and ride the trend for a few weeks or months, that may be all you need. That’s why having a perspective on the markets is so important.

That’s also why Elliott Wave International hand-picked the best clips from their trader-focused “Outlook 2015″ video series to share with you and give you a fresh perspective in 5 key markets: EURUSD, EURJPY, GBPJPY, Crude Oil & Gold

Access this free video series now and get new video forecasts by 4 of EWI’s veteran Pro Service analysts.

Each of the four videos will show you the market’s big Elliott wave picture, give you a forecast for the weeks and months to come — plus several short, punchy, market analysis lessons in Elliott waves/technical analysis you can use again and again.

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Crude Oil Leads the Euro

By Tom McCellan

Crude Oil Leads the Euro

Crude oil prices leading indication for euro
February 12, 2015

There is information about the future of the euro, and it is hidden in plain sight, right in the chart of crude oil prices.

This week’s chart reveals that relationship, which is yet another example in a long series of what I call “liquidity wave” relationships.  That refers to the phenomenon of a price structure appearing in one market’s price plot, and then appearing again sometime later in another.  I liken it to an ocean wave appearing at the end of a pier, and then hitting the beach several seconds later.  If you can figure out what price series represents the end of the pier, and what other one responds later, that can be terribly useful information.

Continue reading Crude Oil Leads the Euro

History in the Balance…

Guest Post by David Stockman & Stealthflation

History In the Balance: Why Greece Must Repudiate Its “Banker Bailout” Debts And Exit The Euro

Now and again history reaches an inflection point. Statesman and mere politicians, as the case may be, find themselves confronted with fraught circumstances and stark choices. February 2015 is one such moment.

For its part, Greece stands at a fork in the road. Syriza can move aggressively to recover Greece’s democratic sovereignty or it can desperately cling to the faltering currency and financial machinery of the Euro zone. But it can’t do both.

So by the time the current onerous bailout agreement expires at month end, Greece must have repudiated its “bailout debt” and be on the off-ramp from the euro. Otherwise, it will have no hope of economic recovery or restoration of self-governance, and Syriza will have betrayed its mandate.

Moreover, the stakes extend far beyond its own borders. If the Greeks do not take a stand for their own dignity and independence at what amounts to a financial Thermopylae, neither will the rest of Europe ever escape from the dysfunctional, autocratic, impoverishing superstate regime that has metastasized in Brussels and Frankfurt under cover of the “European Project”.

Continue reading History in the Balance…

Around the Web

 

Around the Web

  • Would a Gold Standard Brighten Economic Outcomes?  –Big Picture  [biiwii comment: the old argument… the author’s conclusion is laughable as practically applied by today’s CB’s (“a gold standard is not needed to preserve price stability as long as a country’s central bank is independent and has a clear mandate to achieve price stability), but a gold standard for a modern financial and economic system is not the answer; discipline and transparency are the answers in large part imo; esp. discipline, which is lacking world-wide]