From the top of my headI have been trading FX for 35 years but still there are a few things that puzzle me – or rather – irritate me.
« If you have a lot, you want more » is a saying. In FX it means that if it goes a lot, it shall go even more. At the start of the year – just below 1.3000 – the whole bunch of pundits predicted the EURUSD down for a retest of 1.2660. A week later the same guys started talking about 1.37-1.42.
What caused the change of mood? Draghi might be the first that comes to your mind and you are right. It was Draghi – again.
Like six months ago you might add but then I disagree. There is a huge difference between what he said then and what he said a few days ago. Back last summer he said « we will do whatever it takes…..and believe me it will be enough ». That is strong wording and a strong commitment. No wonder the falling trend as seen throughout the first half of 2012 was reversed.
This time around though - when pressed in a Q&A session whether the decision by the governing council not to cut rates was unanimous - Draghi replied « yes » and then he outlined why. The « yes » was firm and the explanations very detailed but neither of the supporting arguments were news. It was the way he said it and his confidence level when lining up the arguments. I buy that it was a EURUSD positive performance but not to the extent of that seen six months ago. I see a big difference in the two performances and I will claim that the 300 pips we got from the show ten days ago was to the limit of what was in that statement – nothing more.
Draghi expressed confidence and bulls took the advantages of that. Above the high of last week I see nothing but struggle for EURUSD simply for the reason that confidence has taken us up 1200 pips over the last six months. To extend that move further we need more than Draghi.
Major "market movers" 2013
- These are the major topics I set out as « major market movers » in my « The EURUSD Strategy Builder » six weeks ago.
- Since then the outlook for a rate cut by the ECB might have been delayed a bit but is still on the cards. I have moved the rate cut expectations three months further into 2013 than what was originally set out.
- On the next page I have set out when these different « market movers » are likely going to have a significant impact on EURUSD.
- I have further set out what I think will be the impact on EURUSD in terms of major moves and trends throughout 2013. This formed the basis for my EURUSD strategy planning 6 weeks ago and it is still my overall view.