Wednesday, October 17, 2012
There was a positive handover into today’s trading session for the EUR/USD pair as risk appetite continued to dominate the forex market for another day. The recent credit rating decision to hold Spain at a Baa3 status from Moody’s Investor Services caused the euro to pop higher during the Asian trading session. Although there was risk appetite in the market, the rally was very limited and well subdued. On today, we saw the EUR/USD rally 86 pips from the session low at 1.3054 to the session high at 1.3139.
In today’s technical analysis video, we will describe price action in EUR/USD and identify common areas of support & resistance for trade entry.
Thursday, October 11, 2012
There was a negative handover from yesterday's trading session into today's trading session as news of S&Ps downgrade of Spain's credit rating to BBB- put pressure on the common currency. As Spanish 10yr bond yields rose, we saw the price of the EUR/USD pair fall during the first half of the Asian trading session and it found support at 1.2825, which became the session low for the day. It was at this level where market sentiment shifted from being risk averse to having risk appetite as bids from Middle Eastern Sovereigns & Russian Banks caused the pair to rally & retrace all of its losses from earlier. There was news of a single no-touch barrier option at 1.2800 that these Asian institutions defended from being triggered and this initiated the move higher. In addition to this, investors also hoped that the recent Spanish downgrade, along with the fear of rising bond yields in Spanish paper, will force Spain to formally request for aid from the ESM bailout fund, which would trigger the ECB's Outright Monetary Transaction. This news eased the market by pushing Spanish bond yields lower and initiated the risk rally.
Good economic numbers out of the US also enhanced the risk appetite in EUR/USD. Jobless claims from last week fell to a 4 year low at 339,000, which was a 30K drop from the previous week's jobless claims number. The US Trade deficit also widened to $44.2 billion, during the July to August period, as slower global growth reduced foreign demand for US goods or exports. This may cause a rebalancing towards risk and an intentional weakening of USD by the FED to improve demand for US exports. So, this news also contributed to the risk-on rally in EUR/USD. The pair had climbed 125 pips, from the session low at 1.2825 to the session high at 1.2950, where price found resistance for the day.
In today's V.I.P. webinar, we discussed common areas of support & resistance in the EUR/USD pair and we also attempted to place a few live trades using the Slumdog Forex trading system.