EUR/USD Fundamental Analysis January 16, 2012, Forecast

Economic Events

Jan. 16

02:00

EUR

German WPI (MoM)

 

04:00

EUR

Italian Trade Balance

 

Background:

Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.

The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.

Trading comprises of careful market studying, strategizing, planning and executing the plan in a timely manner. This is entirely different to scalping which is resorted to by many a trader on a regular basis. These traders are often clueless as to the market situation and just use this as a type of defense mechanism to compensate for the general lack of information and knowledge. The EUR/USD is a currency pair that certainly offers a lot of currencies trading opportunities if handled correctly.

Highest: 1.5091 USD on 03 Dec 2009.

Average: 1.3709 USD over this period.

Lowest: 1.19 USD on 07 Jun 2010.

EUR/USD started the year with a nice rise but met resistance at the 1.3060 was all downhill from there.

1.3085 was the top border of a very narrow range that characterized the pair towards the end of 2011. It also provided support back in December 2010 and had a pivotal role.

The round number of 1.30 is psychologically important and also worked as some support. After the breakdown, it was shattered. The relatively new low of 1.2945 is still important, and now as clear resistance. If market rumors turn to reality, these points of support and resistance will be trampled by panic.

Today’s rumors or soon to be truths, about downgrades by S&P have pushed the euro down. As European ma

Next week, this point will be of great importance as the Euro continues to sink 1.2520is another support line, before the round number of 1.24, which was of importance a long time ago.

1.2330  and 1.2144 are two points that we are reaching quickly, more discussion will be added if the Euro continues its drop on Monday.

Todays rumors or soon to be truths, about downgrades by S&P have pushed the euro down. As European markets close, we find the euro at 1.2679

Monday morning should find the euro strong against the dollar, as shortsellers exit the market driving up the price of the euro. Depending on the outcome of the s&P reports, the euro may continue to sink throughout the day, but an early morning spike is probable.

Leave a Reply

Your email address will not be published. Required fields are marked *