Tag Archives: euro

Euro Short & Long-Term

By Biiwii

The Euro is gaining the bid as short covering pushes it higher.  Today it is popping through resistance and will try to make that a support level.

euro daily

The target is 120, which would likely be a good opportunity to short it or potentially long Europe again.

euro monthly

We’ll see.  It’s a macro market where letting things play out rather than knee jerking to conclusions is likely to work best until we get a read on the nature of this.

Anti-USD & Euro QE ‘Me Too!’ Trades Updated

By Biiwii

Hey, I know I always seem to need to give these things nicknames (Armageddon ’08, Fiscal Cliff Kabuki Dance, etc.).  Maybe that is a reflection of how non-seriously I take modern finance on a fundamental level.  What we have here are policy and media driven hysterias, both to the positive side and the negative, swaying an emotional collection of players to and fro.  It is more of a game than a science or well heeled, buttoned down profession.

So currently, on an interim basis we are working the ‘Anti-USD inflation trade’ (a bounce in inflation expectations and associated ‘hard’ assets) and the Euro QE ‘Me Too!’ trade, with its template being the US QE that has worked to hyper boost (stock) asset prices.

It appears that the mealy mouthed Fed, still refusing to bail out any savers that are left (both of them), has kicked another leg out from under the US dollar, which had for some reason been discounting a Fed that would begin raising the Funds Rate by now like a normal entity in a normal post-crash bailout environment would have done upon achievement of its objectives.

‘But no, we just need to tweak a few more positive data points out of it or wait until we see the white’s of inflation’s eyes’ implies the Fed.  Whatever, the dollar is down this morning and the anti-USD inflation trade should get a bounce in its step, in line with one of our main themes.  If the May low is violated, Uncle Buck could take a pretty deep correction.

Continue reading Anti-USD & Euro QE ‘Me Too!’ Trades Updated

Around the Web

By Biiwii

It’s been a while since we went around the intertubes for some market analysis…

  • Mortgage Rates at 35 Week High but Purchase Applications Picking Up  –GaveKal  [biiwii comment: a rush to ‘get in’ before the big bond bear (interest rate rise)? but this is the public we are talking about (the same public that was convinced about $200 oil).  that could be bullish for bonds (bearish for interest rates) after our target of 3.6% to 3.7% on the 30 year is registered on the ‘continuum’, though there’s a 1st time for everything, so we’ll avoid overly rigid thinking…]

 

EURUSD; Not Random

By Elliott Wave International

EURUSD: Why Recent Ups and Downs Are NOT Random

How Elliott wave analysis can bring some certainty into the oh-so-uncertain world of forex trading

How do you know what “your” forex market will do tomorrow?

You don’t. We don’t. Nobody does. All anyone can do is guess. But some guesses are more “educated” than others.

In a recent interview, Elliott Wave International’s Senior Currency Strategist, Jim Martens, explained why for the past almost 30 years his favorite method to “guess” at the market’s trend has been Elliott wave analysis:

Jim Martens“Markets are doing what they are supposed to be doing: inflicting the most pain on the most number of people. Markets fool the most number of people at the most unexpected moments, but by tracking Elliott wave patterns, sentiment (and the news) you can prepare yourself.

“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.”

Let’s take a look at a recent example: namely, price action in EURUSD on April 5-7.

Since the mid-March low in EURUSD, Jim and his Currency Pro Service team have been tracking a “messy” Elliott wave pattern in the euro-dollar: a correction. “Messy,” because corrections are just that: choppy, overlapping, often directionless moments when it’s just plain hard to make heads or tails.

Yet, under Elliott wave analysis, even corrections have rules and guidelines. There are 13 known corrective Elliott wave price patterns, and if you nail what part — and of which pattern — you find yourself in right now, you can make a strong case about where the market will go tomorrow.

Case in point — on Sunday, April 5, Jim Martens posted this bullish euro-dollar forecast in his Currency Pro Service:

Continue reading EURUSD; Not Random

Around the Web

By Biiwii

Market News and Analysis From Around the Intertubes

 

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