Tuesday, December 27, 2011

The Anticipated Rate of Dollar to Euro in 2012 Explained

The downgrade of America's AA rating, the deepening debt crisis in Europe and a global deterioration on the economic and financial front, has led major economic and financial experts to look again in their outlook on dollar to euro anticipated rates in 2012. Most of them strongly believe that the governing monetary policy in the Euro Zone which tightened in April will continue in the light till late February, 2012, at least.

This is important whether you're a forex trader or planning a vacation to Europe. Without doubt, dollar is the reserve currency of the world. It took just a financial emergency to show just how significant a reserve currency is. The economic slowdown saw investors panicking and taking their money out of the risky investments and putting them in less risky commodities.

Investors were seen buying the euro. Europe had superior interest rates and a dependable central banking system. The European Central Bank, which is the equivalent of the Federal Reserve, is reluctant to turn to the printing press and inflate the euro. But when a law is no longer goes well with the policy of a government, it can make amendments. This was seen in a very recent example 750-billion euro bail out for Greece, where ECB bought Greek government bonds and printed Euros to foot the bill. However, this will lead to an unavoidable inflation in Euro. The reality is that the bailout has been an utter failure.

One should not make any mistakes here. The uncertainties ware bound to continue and Europe will have to go through more in the coming years. 10% of GDP budget cuts will certify a long and painful recession in Ireland, Portugal, Greece and Italy. This alone could leave negative impact on Euro. Driven by continue concerns in the Eurozone, a soft patch has developed for the euro in recent months.

So, what are dollar to euro anticipated rates in 2012? This is important for any investor and where he should put his money. If we look behind, we will see the Euro peaking in 2008 and then plummeting down massively. But market experts believe it won't be long to see the Euro reaching equivalence with the dollar. With tax raises and budget cuts, it is almost a certainty that the E interest rates would be low in Euro Zone. That clearly means that the U.S. interest rates will catch up with European rates, sooner or later.

However, the inventor would still favor dollar over the euro, as they would get higher returns on their currency deposits. Thanks to the fallout from Europe's debt crisis, your dollar can still be stretched along way, if you go for a vacation there. Short the euro to reap big rewards over the next years if you are in investor.

RBS have warned of further weakening in euro exchange rate in 2012. The euro will reach equality with the dollar, sooner than we think. We are sure you have a fairly good idea now of what are dollar to euro anticipated rates in 2012.

Thursday, December 8, 2011

EURUSD will close above yesterday low possibly

Euro Could Recover Against US Dollar

ssi_eur-usd_body_Picture_7.png, Euro Could Recover Against US Dollar
EURUSD – Sharp Euro/US Dollar volatility has made for indecisive forex trading crowd sentiment. Yet we believe that the Euro may have set a significant sentiment extreme and could continue trading higher through the last weeks of 2011.
Our Speculative Sentiment Index (SSI) data shows that the majority of retail traders are now long the Euro against the US Dollar. We most often use the SSI as a contrarian indicator; if most traders are long, we look to go short. Yet the ratio of traders long to short is a meager 1.16 to 1, and we would ideally see a much stronger shift to turn bearish.
FX Options market volatility expectations remain quite low, and risks show that the EURUSD may remain in a broad trading range into year end. Thus we will stay away from chasing Euro weakness, and indeed this lines up with our views on FX Options and futures sentiment.

Monday, December 5, 2011

Weekly Technical Overview, Forex


Bullish above 1.0330; bearish below 1.0150.

The Aussie breached the key 0.9860 level on Monday and duly rallied, reaching a peak of 1.0330 on Wednesday before trading sideways for the rest of the week. The outlook this week is likely to be initially determined by a break of the congestion range that formed between Wednesday and Friday from 1.0330 down to 1.0150.

A close below 1.0150 and next support is at the lows of the long bullish bar that formed on Wednesday at 0.9940 followed by the peak of November 24 at 0.9780.

A resumption of the gains this week will be signalled by a close above Wednesday’s high of 1.0330. Next resistance is then at the high of November 3 at 1.0450 followed by the twice-tested peak of 1.0760 from September 1 and October 27.

In the bigger picture, as long as the Aussie is below its peak of 1.108, it remains in correction mode. That outlook is supported by the fact the daily ranges are still high and major bottoms are usually formed on lower volatility while tops and the early stages of a downtrend are made on high volatility.

Sup: 1.0150 0.9940 0.9780
Res: 1.0330 1.0450 1.0760

Bearish below 1.3260; bullish above 1.3550.

If you are reading or listening to mainstream financial media you could be forgiven for believing the euro is on the verge of collapse. It is in fact a long way above its all-time lows of under 85 US cents, but it is just above an important support level, a close below which could send it back to its 2010 levels. That level is 1.3140 from October 4.

That level was rejected in the prior week, but the gains were limited to a peak of 1.3550 last week, reached on a bearish candlestick on Friday. The outlook this week depends on a move beyond the range of Friday’s peak and Wednesday’s lows: 1.3550 to 1.3260.

A move below 1.3260 and next support is at the low of November 25 at 1.3210 down to the lows of October 4 at 1.3140. A close below the latter level and the downtrend that started in May this year resumes.

A move above 1.3550 and next resistance is at the well-tested peak of November1 at 1.3870, which is just above the Fibonacci 62% retracement of the losses since late October (1.4250 – 1.3210). Next resistance is at the peak of October 26 at 1.3980.

Sup: 1.3260 1.3210 1.3140
Res: 1.3550 1.3870 1.3980

Bearish below 1.5470; bullish above 1.5780.

A rally last week failed to spark upwards momentum and after making gains till Wednesday, a large proportion of those gains were forsaken in the last two trading days.

The outlook this week is bearish if sterling moves below Tuesday’s low of 1.5470. In that event, sterling could then retest the October lows of 1.5270. A close below that level and the downtrend that started in April this year resumes. Next support is at the July 2010 lows of 1.4940.

A close above last week’s peak of 1.5780 and sterling could then travel to the peak of November 18 at 1.5890 which also happens to coincide with the Fibonacci 62% retracement of the losses since October 31 (1.6170 – 1.5420). Next resistance is at the high of November 8 at 1.6130.

Sup: 1.5470 1.5270 1.4940
Res: 1.5780 1.5890 1.6130

Bullish unless below 77.27.

The yen made good gains on Monday last week but then spent the rest of the week consolidating those gains. That has created a small range between highs of 78.28 and lows of 77.27, a break of which should determine this week’s outlook.

A move below Wednesday’s low of 77.27 and next support is at the lows of November 18 at 76.53. A move below this critical level and there is an increased chance that the USD rally since late October is a dead cat bounce with next support at the low of October 30 at 75.31.

A move above last week’s peak of 78.28 and next resistance is at the high of November 1 at 78.99 then the high of October 31 at 79.53.

Sup: 77.27 76.53 75.31
Res: 78.28 78.99 79.53

Sunday, December 4, 2011

        NEW YORK (Dow Jones)--The weight of Europe's debt problems hampered  the euro Friday, which shed more than a cent intraday as investors became  cautious ahead of a critical European Union summit next week.          With speculation mounting that the International Monetary Fund may  need to commit its resources to contain the euro zone's crisis, the euro rose on  early reports that the European Central Bank could lend as much as $270 billion  to the fund. The news helped spark a rally that was helped by news that the U.S.  unemployment rate fell sharply in November. 
        But the common currency fell anew as doubts set in about whether even that sum would be sufficient to stem contagion from Europe. Over the last week, borrowing costs of Italy and Spain have fallen, yet hover uncomfortably near levels that economists think are unsustainable.
        Meanwhile, skepticism continues to dog Europe's newly-created bailout facility, which analysts say has not attracted nearly enough capital to manage the Continent's growing debt woes by itself. Markets are looking for the ECB adopt a more aggressive stance, yet they appear reluctant to do so unless EU leaders can forge broad-based agreement on new fiscal rules at next week's high-stakes meeting.
        Even if the IMF helps Europe, traders wonder "what's the ECB going to come to the party with?" asked Ray Attrill, senior currency analyst at BNP Paribas. "If Europeans deliver on a fiscal compact, then certainly the ECB will be inclined to be supportive of bond markets," he added.
        Late Friday, the euro was at $1.3392 from $1.3461 late Thursday, according to EBS via CQG. The dollar was at Y77.94 from Y77.70, while the euro was at Y104.40 from Y104.61. The U.K. pound was at $1.5613 from $1.5687. The dollar was at CHF0.9219 from CHF0.9155.
        The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 78.636 from about 78.328.
        Worries about Europe overwhelmed news that the U.S. economy created 120,000 new jobs last month, with the unemployment rate sliding to 8.6% for the first time since March 2009. The focus on the euro zone's woes gave market chatter about the IMF more significance than it would have had otherwise.
        A potential alliance of the IMF and ECB could face some stiff political headwinds. Traders sold the euro on news that Congressional Republicans might block U.S. funds flowing to the IMF that could be used in a euro zone rescue.
        Meanwhile, the ECB's policy meeting Thursday could see the central bank lowering borrowing costs in order to spur the 17-nation currency bloc's sluggish growth. Until the debt crisis is resolved, however, analysts remain skeptical that an interest rate cut will cure what ails the Continent.
        "The market is falling into this pattern of buying on various levels of optimism, then invariably selling on disappointment," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, who expects the euro to fall as low as $1.3215. "I'm still overall negative on the euro until we get something meaningful to hang our hats on, and the IMF doesn't do it for me yet."
  December 02, 2011 17:00 ET (22:00 GMT)

Thursday, December 1, 2011

Forex Trade Setups

Euro gains on action from central banks, 30th November 2011

Trading Setups / Chart in Focus:


The EURUSD pushed dramatically higher today as major central banks around the world collaborated to help ease the mounting pressure of the euro-zone debt crisis. This worked to ignite fresh risk appetite and as a result global markets soared.
The EURUSD gained about 130 pips over yesterday’s close. We can see resistance coming in near the horizontal level at the 1.3600 – 1.3650 area. Should price move higher we will keep an eye on this ‘core’ resistance for potential price action sell signals, but as of now we are sitting on our hands.
Forex Commentary:
In the currency markets today, the EURUSD pushed significantly higher as the central banks of the U.S., Euro-zone, Britain, Canada, Japan, and Switzerland, took collaborative action to ease pressure on European banks.
The EURUSD moved to $1.3440 in late-day New York trading, up from $1.3315 on Wednesday.
The U.S. dollar was lower against the other major currencies too. The GBPUSD moved to $1.5690 from $1.5594. The greenback moved to 77.54 yen from 77.91, the Australian dollar, New Zealand dollar, and Canadian dollar also posted significant gains against the U.S. dollar today.

Other Markets:

In the U.S. markets today, stocks rocketed dramatically higher with the Dow posting its best one day gain since March of 2009. The gains came after the U.S. Federal Reserve bank and other central banks extended help to banks affected by the euro-zone debt crisis.
The Dow gained 490.05 points, or 4.2%, the S&P 500 added 51.77 points, or 4.3%, and the Nasdaq rose 104.83 points, or 4.2%.

Upcoming important economic announcements: 12/1/2011

1st-7th: Britain – Halifax HPI m/m
4:30am EST: Britain – Manufacturing PMI
8:30am EST: United States – Unemployment Claims
10:00am EST: United States – ISM Manufacturing PMI

Risk Warning

please note that Forex trading (OTC Trading) involves substantial risk of loss, and may not be suitable for everyone.