EUR/USD Target 1.40
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Thread: EUR/USD Target 1.40

  1. #1
    I am basing this on a long term trend that happened the last time stocks do good and oil rose.

    Best way to see that is really on a weekly chart.

    I am not doing exact dates and amounts but that basically goes from Nov 2005 with the euro at about 1.700 to April 2008 when it got to the upper 1.59's and briefly popped over 1.60. **

    Figure like 4200 pips in 2 1/2 years.

    Now let us go from December 2016 into Jan 2018 which takes the Euro out of 1.03 to 1.2300.

    Figure like 2000 pips in 13 months.

    Excluding Trump or Kim pushing their buttons, I don't see why this can't go yet another 2000 pips in a year give or take, since that basically reproduces what we have already seen the market do when shares are going nicely and oil is rising.

    **Interesting tidbit: The euro popped over 1.60 the week of April 20 lol

  2. #2
    Not long euro/usd at the moment due to the risk of the ECB making a remark along the lines of 'a euro will interrupts our inflation expectations'

    While that's very likely to trigger the euro to back off a bit, the upward momentum ought to maintain.

    The new normal correlations are: more QE=more powerful currency.

    This of course is the absolute opposite of what market historians would forecast since rising interest rates would be expected to draw need for that currency.

    Dollar depreciation is also a tail risk for stocks since overseas investors (un-hedged) get hurt when they repatriate. For example, euro investors only made around 7 percent over the SP in 2017.

  3. #3
    Before 1.40 , there will be one big pull back.

  4. #4
    Quote Originally Posted by ;
    before 1.40 , there'll be one massive pull back.
    You might be right. I got long again at 1.2430.

    Including all the discussion about how Dragi might do a repeat of September, he basically did the specific opposite.

  5. #5
    I do believe from the new Significance: More QE = stronger currency

  6. #6
    If it did attain that amount in the long term, I wouldn't be surprised. There should be significant pullbacks along the way.

  7. #7
    Quote Originally Posted by ;
    I actually would not be shocked if it did attain that amount in the longterm. There should be significant pullbacks along the way.
    I look at all the same way I search currency pairs. It means the other hand is depreciating, if one side is appreciating. So it makes sense to see gains in energy and stocks prices as the dollar payable from these markets.

    Pre-crisis, the euro was well correlated with stocks and oil, which rose since the eur/usd moved higher. Brent crude was in the past year of the low $ 20 and since it rose, the dollar dropped. This makes sense because as oil rises, it means the dollar is depreciating. Same thing with shares.

    So far as trading is concerned, I use fundamentals to evaluate the management and Fib lines to acquire an entry price. I basically follow the fad but I do not go long at short or tops at bottoms.

    When a market is going up, I place the 100 line in the base and also the 0 line at the top. I then wait for price to drop below a Fib lineup and go from there. The idea with this is to be able to maintain a trade using a stop while using a high upside. When a market is going down I do the reverse.

    My basic objective is to put trades up so that if I win only 1 in 3 transactions, I will at least break even and occasionally turn a little profit. Afterward during times when I'm running better or 50/50, I could score.

  8. #8
    Euro goal 1.40 is living and undamaged, particularly with the Fed saying this week that they expect inflation to quicken.

    Apart from further strengthening the bond bear market, that kind of language suggests the value of the dollar will be decreasing because that in nature is what inflation implies.

    Have a look at everything exactly the same way you look at a currency pair; Food/USD, Gas/USD, Clothing/USD, it all means the same thing. When one side is increasing it signifies the other side is decreasing. So if the Fed is saying it expects inflation to quicken that signals dollar weakness.

    Then we have the trump admin, that is dedied to weakening the dollar. We saw this past feeble at Davos when Mnuchin said a weak dollar supports exports, which of course it will (it also supports the case for more inflation because imported goods become more expensive.)

    What trump said later means less than nothing for me personally, nor does it mean anything into the market generally. Bringing the trade shortages will be something trump down will be eager to brag about, so in my own mind there's no wonder the admin does like a weaker dollar today.

    Turning back to the Fed, what they said signifies a quickening pace of rate increases, with an increase in March all but assured. The question is whether we'll have 4 increases this season instead of the 3 most anticipate.

    This too will have a negative effect on the dollar, as the markets will continue to pursue currencies nevertheless in QE (Europe and Japan.)

  9. #9
    So if we look at the dollar's reaction to the NFP, we could determine everything works like a currency pair. Since the dollar got stronger, 'pairs' such as OIL/USD and STOCKS/USD went down on the charts (the dollar gained while stocks and oil dropped.)

    When you look at things without understanding this connection it will not make sense for stocks and oil to collapse, because more tasks = more powerful economy = more need for items such as stocks and oil. However, because everything works like a currency pair, once the market bought dollars they dropped.

    Moving ahead, the weaker dollar trend will not be broken because all things being equal, when the NFP effect fades (which will happen later today or maybe in the Sunday open) stocks and oil can resume their upward trend.

  10. #10
    After seeing Brent crude bottom just under $68, while the SP was down a bit more than 1 percent, traders began buy also the dollar pulled back form the gains it had made.

    At this time, if you're overall bullish on shares, oil and inflation, which I certainly am, you can buy the euro at a discount and sell the Yen and Loonie while they are overvalued.

    I was studying a market article on Bloomberg that has been talking about a near 3% drop from the SP, which last occurred about two years ago. Despair was indied by the article but I look at it as an opportunity to buy at a discount. Today and if you had done that two years ago you're sitting.

    For instance, I have a Fib in my USD/JPY chart with the 100 line in the top on Jan 18 into the low made on Jan 26. Price popped over the 61.8 after the NFP and I started seeing it while I seemed Brent along with the SP. It climbed a bit farther, I saw those markets start to turn, then bought the Yen.

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