FXstreet.com

FX daily Commentary

0

0

How Long Can the Dollar Remain Strong?

Tue, Oct 7 2008, 09:26 GMT
by Lena Manousarides

FXGreece



What a start of the week we had yesterday, with all markets in the red and DOW JONES breaking important psychological level of 10000 for the first time since October 2004!

What we witnessed yesterday was beyond reason and normality, and many traders all across the globe were left shaken and confused by the markets shenanigans. The main reason for this absurd move in all markets was fresh and renewed fear and uncertainty regarding the global economy and the fact that it became known that the $700B was not enough to fund all Banks and more money would be needed. The move by the FED to provide another $400B was seen by many investors as desperate move; however it was clear from the US authority approach that in desperate times we need desperate measures!

EUR/USD broke important support level of 1.35 and printed a new low at 1.3440 where it corrected form then on. Today the pair was trading well above 1.35 with 1.3620 highest levels seen so far. The move was not enough to break further higher though and pair dropped 100 points.

At a time like this there is a question amongst traders, why the dollar is so strong with US economy going into recession? Well there is not an easy answer there; however it might be interesting to see that in previous recessions, US currency was always strong in order to help the trade deficit. With the 700 billion rescue plan, the trade deficit will be even wider and therefore the only way to fight it is through a strong currency. Also the fact that we have the US elections soon is another factor to consider, however with this madness that we experience daily all the logical explanations as to why anything happens, are out of the window.

Today the economic calendar is empty, with only important events being the speech by Bernanke in Washington regarding the bank’s monetary policy and the state of the economy which traders will monitor closely due to the latest developments. Analysts are looking for signs as to what the bank is planning to do to fight the situation and many predict that it will be forced to cut rates sooner rather than later. Also a bit later today we have the FOMC minutes from the last meeting and again traders will be looking for hints as to what are the banks plans.

EUR/USD is clearly one downtrend and as long as it is trading below 1.3660 we shall see further losses. If the pair breaks 1.34, next important level is at 1.3360.

So, in a few words, we are experiencing very difficult times right now and the only wise thing to do is to stay aside and remain aside until the markets calm down. If we trade we need to be aware that technicals and fundamentals do not apply these days and we can only trade the trend until signs of reversal arise...


Archive

FXGreece  | 98 Vouliagmenis Ave. Glyfada Athens
http://www.fxgreece.gr/ | trading@fxgreece.gr

Legal disclaimer and risk disclosure

  1. The details and information included in the provided analysis, are part of research based exclusively on currency charts and are of purely instructional and educational nature. None of the information featuring in the analysis can be considered as an invitation for opening positions in FOREX market or in the market of forward contracts or any securities listed on an organized or unorganized market.
  2. We assume no responsibility for any kind of losses ,profits or property loss resulting, in whole or in part, from acts that are based either directly or indirectly on the processing or the use of information, details and strategies, the reader may find in the analysis. The readers hold full responsibility for the use and the results of their actions.
  3. The recipients of the analysis must acknowledge and accept that investment choices of any kind, especially concerning the FOREX market, contain risks (high, low and occasionally zero) of reduction or even loss of their investment. Therefore, they should always be cautious prior to any kind of action.
  4. We reserve the right to change the terms and the characteristics of the analysis.
  5. The contents of the analysis are solely intended for personal use. They may not be retransmitted, reproduced, distributed, published, adapted, modified or assigned to third parties in any way whatsoever. Anyone having access to them is required to comply with the law provisions on the protection of third party intellectual property rights.

Related reports

Daily Forex Outlook - Markets Recover lead by GE surge by Easy Forex
Wed, Dec 3 2008, 02:11 GMT

Short Term Analysis - EURUSD is forming a short term cycle bottom by ForexCycle.com
Wed, Dec 3 2008, 01:20 GMT

Daily Forex Strategy Briefing - Greenback Modestly Lower as Stocks Recover by CMS Forex
Tue, Dec 2 2008, 23:38 GMT

Daily Global Commentary - What's so Paradoxical about Thrift? by Northern Trust
Tue, Dec 2 2008, 22:21 GMT

Daily Market Commentary - What is Behind the Dollar Rally? by GFT (Global Forex Trading)
Tue, Dec 2 2008, 22:17 GMT

eurusd, usd, crisis, eur, us, bailout, market, dowjones

View All

Related content

TREASURIES-Edge down in Asia but supported by safety bid
Thomson Financial News | Wed, Dec 3 2008, 04:55 GMT

UPDATE 1-Post Properties cuts div; investment head to go
Thomson Financial News | Wed, Dec 3 2008, 04:52 GMT

B. Moss Clothing files for bankruptcy, to close stores
Thomson Financial News | Wed, Dec 3 2008, 04:05 GMT

Paulson debates next $350 bln in US bailout - WSJ
Thomson Financial News | Wed, Dec 3 2008, 03:57 GMT

CITIC Pac seeks shareholders' nod on bailout plan
Thomson Financial News | Wed, Dec 3 2008, 02:08 GMT

eurusd, usd, crisis, eur, us, bailout, market, dowjones

View All

Interested in forex trading? forex brokerage firms!


MF Global UK Limited
Contact the broker/FDM
Open a demo account
ACM Advanced Currency Markets SA
Contact the broker/FDM
Open a demo account
FXDD
Contact the broker/FDM
Open a demo account
IG Markets
Contact the broker/FDM
Open a demo account
MIG INVESTMENTS SA
Contact the broker/FDM
Open a demo account

FXstreet.com will give you a 3 months membership as soon as minimum rebates have been generated (€150 for private trader/ €300 for corporate trader)

[Read Premium full description]

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

©2008 "FXstreet.com. The Forex Market" All Rights Reserved.