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  • EURUSD Coming Week Technical, Fundamental Outlook & Why USD Rising While Rates Fall

    From fxempire.com

    The pullback in global indexes, and the implied risk aversion, continues. It has now officially reached the US indexes as they log their second straight week in their double Bollinger® band neutral zone. It could have been worse. For example, the S&P 500 would likely have closed the week much lower, and below key support at 1900, if Russia had not announced an end to military “exercises” on Ukraine’s border. The risk aversion driving global markets has caused some kept the USD up despite falling treasury yields, as investors’ focus on safety rather than yield. See our fundamental analysis for more on ... (full story)

Still a bit unclear on how USD can rise when US rates fall. Anyone?
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Russia calming, Mideast ignored unless oil supplies threatened or a chance to bash Israel for daring to defend itself. Suspect a bounce this week?.
correlations are not 100% but im sure currency will catch up ... but also a bit of risk aversion helps the US (russia Ukraine and now Iraq).
Quoting Yali Lev
Still a bit unclear on how USD can rise when US rates fall. Anyone?
USD usually falls if benchmark US rates fall because falling rates mean USD and USD denominated assets pay less (in general) and so traders anticipate falling USD demand and sell USD. However if rates falling due to rising demand for US treasuries as safe haven assets that means other safe haven assets like the USD also in demand.

The key point here is that like anything else the USD’s ‘price’ rises or falls with demand (assuming fixed supply). Usually falling rates imply falling USD demand. However when falling rates are due to rising demand for safe haven treasuries and other safe haven assets, demand will rise for the USD both because it’s seen as a safe haven asset, and because those treasuries and other high-grade bonds are bought with dollars and thus also drive USD demand.
Quoting n_aftab
correlations are not 100% but im sure currency will catch up ... but also a bit of risk aversion helps the US (russia Ukraine and now Iraq).
suspect once risk aversion eases that alone cuts demand for US treasuries and USD and the said correlation resumes.
Quoting Yali Lev
Still a bit unclear on how USD can rise when US rates fall. Anyone?
This is a good question and the answer is complicated, so I will just give a hint. One might naturally expect that USD strength would reflect in lower rates (and therefore greater demand for) US Treasurys. But the markets for US Treasurys and for the USD, although related, are, of course, separate. There can be strong demand for Treasurys that doesn't necessarily show in the demand for USD cash. The cash market volume is orders of magnitude greater that that for Treasurys. And the issuance of Treasurys has been shrinking with the US deficit.
"If The Fool persists in his Folly he will become wise." - William Blake
Example: Friday, the MMs pumped EU and torpedoed GU.

It really does not help trading to focus on what the "USD" is doing, because when it comes to involved equities, the market makers will always be playing their games, applying themselves to the business they run - the market - by moving prices to obtain the liquidity they need to build the positions they want. And because they can do this over a range, they might be moving one xxxUSD pair one way and moving another xxxUSD pair another way in their up/down price manipulation strategy to confuse the market and to get liquidity on both pairs to build the same side positions on both pairs.

So GU could have been traded short for profits on Friday, while EU could have been traded long for profits on Friday.

It is always best to divorce yourself - if a trader - from "news" content and just focus on the chart of what you are trading. The market makers use "news" to their advantage, manipulating prices to make themselves profits, which frequently causes price changes to be out of sync with what "newsies" might be expecting.
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If downward momentum so strong why anticipate a bounce? Easing Russian invasion threat?
Quoting traderathome
Example: Friday, the MMs pumped EU and torpedoed GU.

It really does not help trading to focus on what the "USD" is doing, because when it comes to involved equities, the market makers will always be playing their games, applying themselves to the business they run - the market - by moving prices to obtain the liquidity they need to build the positions they want. And because they can do this over a range, they might be moving one xxxUSD pair one way and moving another xxxUSD pair another way in their up/down price manipulation strategy to...
GU? ie....?
It bothers me when people say they. Its like the market is out to get us or something! There is no they, it is you vs the market. No one ganging up you moving price against your SL. You are in the highest league of competition. Its your brain vs millions of others out there. You wanna win, you have to quit whining about the price and be 2 steps ahead.
All posts are my personal opinion
Quoting Yali Lev
Still a bit unclear on how USD can rise when US rates fall. Anyone?
Smile theory on USD look it up
All posts are my personal opinion
Quoting Rtm
It bothers me when people say they. Its like the market is out to get us or something! There is no they, it is you vs the market. No one ganging up you moving price against your SL. You are in the highest league of competition. Its your brain vs millions of others out there. You wanna win, you have to quit whining about the price and be 2 steps ahead.
Who is whining? Traderhome? I don't see that he whines. He just tries to explain the movement of some markets, EU and GU.

I kind of agree with him. I find the movement of some markets are not usual, that means well, they are just unusual.

I don't say unusual is bad nor good. It's just unusual.

So do you think I whine, because I say some markets are unusual?

I think you must have misunderstood what Traderhome said. Try to read his post again, and try to find his points.
I don't see traderhome swears at them. Some swear badly, but he calmly explains the market.
Quoting frx_trader
Who is whining? Traderhome? I don't see that he whines. He just tries to explain the movement of some markets, EU and GU.

I kind of agree with him. I find the movement of some markets are not usual, that means well, they are just unusual.

I don't say unusual is bad nor good. It's just unusual.

So do you think I whine, because I say some markets are unusual?

I think you must have misunderstood what Traderhome said. Try to read his post again, and try to find his points.
I am not targeting anyone specific I am just saying as a collective I am tired of seeing posts of people referring to some conspiracy theory behind a market moving force. I see it said so much by traders who usually dont understand the market that well. If you dont like the game, dont play it!
All posts are my personal opinion
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Quoting Rtm
I am not targeting anyone specific I am just saying as a collective I am tired of seeing posts of people referring to some conspiracy theory behind a market moving force. I see it said so much by traders who usually dont understand the market that well. If you dont like the game, dont play it!
Nice One!


The Crow

The market is not user friendly does not mean it is rigged in any way, shape or form. If it was so amenable to price discovery by every Tom, Dick and Harry it would not exist to provide the sorts of potential rewards that attracts every Tom, Dick and starry eyed Harry in the first place.
Quoting Rtm
I am not targeting anyone specific I am just saying as a collective I am tired of seeing posts of people referring to some conspiracy theory behind a market moving force. I see it said so much by traders who usually dont understand the market that well. If you dont like the game, dont play it!
I agree, I'm also sick and tired of this conspiracy theory thing. I admit that there's a slight chance for a collective effort from a few big banks to drive the market in a small way, but "they" cannot do it every time all the time. And still, if there's some conspiracy going on, it makes the game just more challenging.

All you need to do is watching your charts, it's all there, even the conspirator's moves.

Smart trading!!!
Eur still needs a wave up before coming down.
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  • Story Stats
  • Posted: Aug 10, 2014 3:19am
  • Submitted by:
     Cliff Wachtel
    Category: Fundamental Analysis
    Comments: 17  /  Views: 8,026