Tuesday, June 12, 2012
During today's trading session, the price of the EUR/USD pair was well contained within an 86 pip range as investors remained uncertain about the details surrounding the Spanish Banking Bailout & the outcome of the Greek Elections over the weekend. The session high for the day was at 1.2529 and the session low was at 1.2443. Since there was so much negative event risks hanging over the market, many investors chose to sit on the sideline and not enter a euro position. This was the reason for the lighter than normal trade volume for the day.
In today's technical analysis video, we will briefly explain the price action in the EUR/USD pair and identify common areas of support & resistance for potential trade entries.
Wednesday, June 6, 2012
During today's webinar, we discussed the outcome of the ECB's Monetary Policy decision and its effect on the EUR/USD pair. For most of the trading session, the common currency rallied across multiple crosses on expectation that President Mario Draghi & the ECB would cut interest rates as a means to deal with the sluggish & poor data coming out of the Eurozone. However, the ECB decided to leave rates unchanged at 1.00%, which resulted in a sharp drop in the pair. Mario Draghi mentioned that some of the issues with the Eurozone Sovereigns have nothing to do with monetary policy, but really a lack of action among EU policy makers to get their structural & fiscal house in order. So, this unexpected move to leave rates unchanged, caused the EUR/USD to slide & it pared most of its gains prior to the New York Open.
Although the ECB decided to take no action to ease markets & provide stimulus, the price of EUR/USD still managed to rally during most of the US Trading Session. For the past few days, EU Policymakers have been discussing the likelihood of a fiscal union or fiscal integration since the issues coming out of the Spanish Banking Sector have opened the door towards setting up a possible euro-wide banking union. This banking union would be used to help recapitalize the Spanish Banks & any troubled bank in the Eurozone.
There are also discussions among Central Banks around the world of some coordinated effort to provide liquidity in an attempt to stimulate the global economy. China has decided to cut their reserve ratio requirement, which would stimulate growth in their economy. This news had restored investor confidence for the immediate term and has caused risk appetite to be the final tone for the day.