Fundamentally-The Euro Rally is Dead:
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Thread: Fundamentally-The Euro Rally is Dead:

  1. #1
    Whenever possible, I try to spot situations and the way I could trade in them. After Trichet's press conference, I wrote that he had pushed the Euro rally into the edge of this cliff by decreasing the estimates for inflation in 2007, all that had been had to head over that cliff was another drive and the NFP may be the force to do exactly that. Well, that scenario has come about. The strong reading on the NFP, combined with the Septemebr and October revisions that included an additional 42K jobs into the period (making the three month average about 135K/month), was sufficient to push the Euro within the border that Trichet pushed it into.

    Currently, the 2 items which were on the table driving the Euro higher was the likelyhood of an early 2007 ECB rate increase combined with a March Fed rate cut. Those choices are presently off the table.

    The only question in my mind is the steepness of the warrior. Fall a or A vertical fall sloped. My opinion? Steep and fast. Why? The need for traders to increase end of this year profits. But you know what? Steep or gentle it doesn't really matter, because one way or the other, the Euro will drop so long as the current fundamentals hold. Have a look at the hourly charts to determine how it may go:

    On up the road, there was a few conjestion about 3250, then about 3210, then again about 3080. Below it conjested about 2950.

    No more term trend depends on continued fundamentals, or the shortage of new, different fundamentals, to push it thru technical areas of support and resistance. So the fundamentals I've outlined above have to remain in order for the trend to continue.

    Will they? Nothing's about the calender for the Eurozone or US. Where things are, I'd look to determine. I think the Euro will finish Monday reduced then where it opens on Sunday. There's German ZEW and US Trade equilibrium, followed by the Fed announcement tuesday. There would be A trade that is wonderful safe to exit your place before those statements. I don't think they'll do apart from cause some erratic movement since traders will be awaiting the Fed announcement. Take some profit before those statements and allow the Fed announcement get published. We'll check the announcement and market reaction, then proceed from there.

  2. #2
    Quote Originally Posted by ;
    Just a couple of things to be aware of when trading here:

    The Euro is sitting at about 3145 now. If you wanted to get in now-I do not think that it would be a fantastic trade. Why? Because u need to place your stop at like 80 and it's very likely to hit on a few support. I've been in it for awhile, so though it strikes 80 I got like 60 pips thus I'm not worried. Could it return to 80? Sure. It might go over that also. . .so if u did not get in at or over 3175...I'd wait for the rest below 25. It is a trade that is safer.

    I will tell u what I find the most interesting thing in currency right now. Look at the UK data-inflation the highest in years. . .jobs strong. . .it's almost a sure bet that the BoE is gonna increase rates in Jan.. .so where is the pound goin? Nowhere. Why? Do not know. . .but someone's buyin $'s someplace...
    yep, 3125 is the low about the 10th - 11th.

  3. #3
    Hearing the NY Fed will release the Empire manufacturing index in the next 15 minutes because its was mistakely posted to the NY Fed's site earlier today. The reported amount was 23.3 vs. the expected 17.7 and prior 26.7. The majority of the street is likely aware of the and that's why EUR is near its lows.

  4. #4
    Lt;TABLE id=NewsIndex design =FONT-SIZE: 7.5pt; WIDTH: 100%; BORDER-TOP-STYLE: groove; FONT-FAMILY: Arial; BORDER-RIGHT-STYLE: groove; BORDER-LEFT-STYLE: groove; BORDER-BOTTOM-STYLE: groove cellSpacing=1 cellPadding=2 border=0gt;lt;TBODYgt;lt;TR style=COLOR: black; BACKGROUND-COLOR: #e7e3e7gt;lt;TD style=FONT-WEIGHT: daring vAlign=top noWrap width=60 halign=leftgt;14:52lt;/TDgt;lt;TDgt;NY Fed Empire sub indices are blended; futur index at 42.6 after 34.9; new orders index at 25.1 after 22.4; employment index fell to 14.1 from 24.5; prices paid fell to 28.1 from 34.9; therefore some great forward looking indiors, but weakness in employment and prices dropped are likley to outweigh and limit dollar gains in the better than anticipated report. Lt;/TDgt;lt;/TRgt;lt;TR style=COLOR: black; BACKGROUND-COLOR: whitegt;lt;TD style=FONT-WEIGHT: daring vAlign=top noWrap width=60 halign=leftgt;14:49lt;/TDgt;lt;TDgt;NY Empire index at 23.1 vs. prior 26.7, however better than forecast 17.7 lt;/TDgt;lt;/TRgt;lt;/TBODYgt;lt;/TABLEgt;

  5. #5
    Quote Originally Posted by ;
    Just a couple of things to be conscious of when trading this:

    The Euro is sitting about 3145 now. If you wanted to get in now-I don't think that it would be a fantastic trade. Why? Because u need to put your stop at like 80 and it's likely to strike on some strong support around 25. I've been inside for awhile, so even though it hits 80 I got like 60 pips thus I'm not worried. Can it go back to 80? Sure. It could go above that. . .so if u did not get in at or above 3175...I would await the break below 25. It is a safer commerce.

    I will tell u what I find the most interesting thing in currency at this time. Examine the UK data-inflation the highest in years. . .jobs strong. . .it's almost a sure bet that the BoE is gonna increase rates in Jan.. .so where is the pound goin? Nowhere. Why? Don't know. . .but someone's buyin $'s somewhere...
    Wow NewstraderFX this is the moment we'r searching for the EURO breach the 1.3125 what's your initial target?

  6. #6
    Broke 25 following the report and hit the next area of resistance @ 3070-then held 90.

    Where to from here? Can not say for certain, but I'm HOPIN to get a break below 70. When it gets to the 60's u could be good to thing is if it breaks a bit above 70 again-get out with a few pips loss. Just look for it to get just below 70 again to find brief.

    No garuntee it'll get to 70 so don't short while it's from the 90's. IF 70 can break-the second section of strong support is prob about 2940-50

    BTW-i'm totally amazed at how the $ is responding. Really, it must have continued to weaken off the core CPI information, but it looks like the TIC data has helped. Evidently, someone is buyin $'s. . .big time.

  7. #7
    Can't have the dollar whilst the huge guns are in China...

  8. #8
    Quote Originally Posted by ;
    Broke 25 following the report and hit the next area of resistance @ 3070-then held for a while @ 90.

    Where to from here? Can not say for certain, but I'm HOPIN for a break under 70. Once it reaches the 60's u could be good to go-the issue is if it breaks a bit above 70 again-get out with a few pips loss. Then look for it to get below 70 again to get brief.

    No garuntee it will get to 70 so don't short while it's in the 90's. IF 70 can break-the next area of strong support is prob around 2940-50

    BTW-i'm totally amazed at how the $ is reacting. Truly, it must have continued to weaken off the core CPI data, but it appears like the TIC data has really helped. Obviously, someone is buyin $'s. . .big time.
    Industrial Production has also helped (came out 0.2percent vs fc of 0.0percent ). Still, with the customer nevertheless healthy the FED won't be considering easing at present coz inflation risk are now less of a barrier...

  9. #9
    Http://www.bloomberg.com/apps/news?p...nvxcrefer=home

    Here is the report from BB-it's somewhat confusing, but I believe this the important thing to check at:

    up to now this year, consumer prices are rising at a 2.2 percent rate, compared with a 3.8 percent rate in same period last year. Core prices are climbing at a 2.6 percent rate, following a 2.2 percent rate during the first 11 months of 2005.

    So it looks like core CPI is climbing higher this season afterward for the exact same period last year and that is it's still way over the Fed's preferred target of 1-2%.

    The November increase in core consumer prices throughout the 12 months ended in November has been the smallest year-over-year gain since June, the current figures revealed. September's 2.9 percent increase was the biggest 12-month leap since 1996.

    So core CPI could be trending down, but the bottom line is that it's.4 higher then the exact same period last year. Surely no indiion yet that a rate cut is imminent. Definately not I would think. Following that.

    And yeah-the TIC information indies enormous foreign investment in stocks and government paper. . .definately indiing where all the recent $ buying is coming from...

  10. #10
    Quote Originally Posted by ;
    http://www.bloomberg.com/apps/news?p...nvxcrefer=home

    Here's the report from BB-it's somewhat confusing, but I believe this the important thing to look at:

    So far this year, consumer prices are rising at a 2.2% rate, compared with a 3.8 percent rate in same period last year. Core prices are climbing at a 2.6 percent rate, following a 2.2 percent pace during the first 11 months of 2005.

    So that it looks like core CPI is rising higher this season then for the exact same period last year and that is it is still far over the Fed's preferred target of 1-2%.

    The November rise in core consumer prices throughout the 12 months ended in November has been the tiniest year-over-year gain since June, the current figures revealed. September's 2.9 percent increase was the biggest 12-month jump since 1996.

    So core CPI may be trending down, however, the most important thing is it's.4 higher then the exact same period last year. No indiion that a rate cut is imminent. Definately not for March I would believe. After that, perhaps.

    And yeah-the TIC data indies huge foreign investment in equities and government paper. . .definately indiing where all the recent $ buying is coming from...
    trade deficit and TIC data is related especially looking at U.S. and China imports/exports. China is not going to convert the dollars to yuan, but instead invest it in U.S. market, now's TIC data was huge, but not sufficient to cover the trade deficit to have a sizable move.

    There has been a post by financial instances where Russia and other OPEC nations are diversifying in the dollar for the euro, and greenspan approved of this gesture by minding these diversifiion.

    Btw, next fib daily retracement/support amount is 1.3030 (38.2percent )

    at this point, I do not believe the fed will reduce rates early next year, possibly mid season in june. Today's CPI may be slow expansion but slashing of price for retail sales and reduced oil prices perhaps be accountable.

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