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Masoud : EUR/USD Review 11 Apr 10

Hello Koala King and folks.

Good day to you!

In this week, generally improving economic conditions and clear signs of strengthening recovery in U.S. economic indicators such as the US NFP on Friday caused the economic prosperity and strengthening of the commodity market and commodity exchanges. This caused a limited rise of the US Dollar. (The Dow index had grown considerably and climbed with market goods. There was warning about the limitation of growth of the US Dollars).

The problem for the Euro seemed to be more complicated. Although the Europe Union Summit Thursday was completed, it was still rather ineffective in preventing the Euro from falling further.

Currently there is a kind of economic divergence developing between the European countries and countries like America, Australia and Canada. In these three countries, the economic situation seems to be fairly stable and their economic statistics are growing. Unlike in the European countries and Britain, there appear to be confusion and stagnation.

Minot of the Federal Reserve was dovish and had suggested that the banking authorities should not rush to raise interest rates. Minot’s mild stance was negative for the US Dollar against the high-yield currencies.

A point to note that this time the Federal Reserve speech was not fixated on the issues of interest rates. This statement of Minot was made in March. A statement made last week before NFP was released. Bernanke reminded about the high unemployment rate and its threat to the improving economic growth.

In the Europe conference, Mr Trichet expressed hope that Greece would solve the problem of debt herself, requiring no help from Europe. These words of faith seemed to stop Euro descent for now, but these words were not concrete actions required by the markets. As the economic problems of Greece probably need more than a simple fix, it’s descending pressure on the Euro will probably reassert itself.

Another issue that attracted the attention of the market was the possible view of modern Chinese Yuan rate being un-pegged. After a search trip to China, the Treasury Secretary of America published an article in The New York Times that speculation about rate increases may cause a raise of the Yuan. Apparently, investors are now buying the Chinese Yuan.

From a technical point of view, the price as seen above is currently on the daily trend line. If the daily trend line be broken, and the price could go above 1.36, then we will have a W to indicate that the uptrend for the Euro is here. The next important resistance may be 1.3840 with possible retracements every now and then. However if prices fail to break the trend line, or the price can not go above 1.36, the price may return towards 1.33.

Never forget “Eat Your Losses… Before Your Losses Eat You”.

Have a great weekend.


Masoud is a businessman and a Senior Koala

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