Parity in EURUSD
Hello dear traders,
three days ago the price in EURUSD took out the low from 12/26/2016 and continued to run down. We are now at the price level of December 2002. This means that the common currency, calculated in dollars, is worth less than it has been for almost 20 years. As in 2002, analysts see the parity as a possible scenario. At that time they were wrong, as they have often been, because the price then went up to 1.60. If the price hits parity any time, it would be the first time since the single currency's inception in 1999 that the euro would be worth less than the dollar. The euro has been in a downward movement since 2008. The so-called experts cite the mortgage crisis, the euro crisis and the almost bankruptcy of Greece as reasons, which were responsible for the collapse of the euro.
With the current gas crisis in Europe, an imminent recession is being forecast and, in addition, a faster turnaround in interest rates will take effect in the USA in order to curb inflation. The Eurozone exports $493 billion worth of goods to the US and the US exports $272 billion worth of goods to the Eurozone. The stronger the dollar, the cheaper the US can import goods from the eurozone. As a result, even more goods could be sourced from the eurozone. Germany's trade surplus has been criticized for decades. This could become even more dramatic if goods become more expensive in the USA. The fact is that the currency is currently experiencing a comeback, as many investors increasingly see the dollar as a crisis currency. This means that many investors regard the dollar as a so-called safe haven. Investors who want to minimize risks therefore prefer to invest their money in dollars rather than euros. However, this approach has a small catch. The biggest big players in the world trading in EURUSD are day traders. These big players work according to the economic principle and want to make short-term profits. To work efficiently here, they must always be in an opposite position to the crowd.
So if the crowd is convinced that the parity can be achieved, then everyone must buy the dollar at present. This is then a good opportunity for the big players to get out of the dollar and collect the euro at the same time. When they then push the price higher, the short traders' stops help catapult the price higher. In my next video: "The fairy tale about aggressive salespeople", we'll talk about these points in detail. Since the launch of the single currency in 1999, the average price in EURUSD has been 1.19563. The average price since 1971 is 1.07. The dollar and the euro are the most traded currencies on the stock exchange. It is disadvantageous in many respects for both the USA and the euro zone if the euro or dollar is too expensive. Of course, the euro has gotten cheaper and cheaper in recent years, but when is the best time to buy a currency if it's cheap or expensive?
The experts see the upcoming gas crisis in Europe as one of the main reasons for the accelerated decline of the euro currency. I can partly agree with that, but in the long term this will bring great opportunities for the independence of the euro zone. When the Europeans finally wake up and master this gas crisis with flying colours, dependencies on energy suppliers will be eliminated. This means that Europe can reposition itself and the euro can regain strength. Furthermore, we must not forget that EURUSD is a sideways market. In the long term, an investment in EURUSD is unprofitable, so I would rather invest in the DAX or S&P. I also created a yield triangle for the EURUSD, where you can calculate the yields. You can find the article here:
https://www.forexfactory.com/thread/...6#post14031296
The question of whether parity will be reached or not depends solely on when the big players start collecting the euro. This is exactly why you should focus on the limit orders of the big players to see what is happening in the market. News and rumors are completely irrelevant to EURUSD price action. The price rises because the big players collected the euro beforehand and the price falls because the big players collected the dollar beforehand. Of course, afterwards, the experts can always explain why the price moved up or down. But the art of trading is anticipating what will happen next.
I wish you continued success in trading
Best regards, Michael
Hello dear traders,
three days ago the price in EURUSD took out the low from 12/26/2016 and continued to run down. We are now at the price level of December 2002. This means that the common currency, calculated in dollars, is worth less than it has been for almost 20 years. As in 2002, analysts see the parity as a possible scenario. At that time they were wrong, as they have often been, because the price then went up to 1.60. If the price hits parity any time, it would be the first time since the single currency's inception in 1999 that the euro would be worth less than the dollar. The euro has been in a downward movement since 2008. The so-called experts cite the mortgage crisis, the euro crisis and the almost bankruptcy of Greece as reasons, which were responsible for the collapse of the euro.
With the current gas crisis in Europe, an imminent recession is being forecast and, in addition, a faster turnaround in interest rates will take effect in the USA in order to curb inflation. The Eurozone exports $493 billion worth of goods to the US and the US exports $272 billion worth of goods to the Eurozone. The stronger the dollar, the cheaper the US can import goods from the eurozone. As a result, even more goods could be sourced from the eurozone. Germany's trade surplus has been criticized for decades. This could become even more dramatic if goods become more expensive in the USA. The fact is that the currency is currently experiencing a comeback, as many investors increasingly see the dollar as a crisis currency. This means that many investors regard the dollar as a so-called safe haven. Investors who want to minimize risks therefore prefer to invest their money in dollars rather than euros. However, this approach has a small catch. The biggest big players in the world trading in EURUSD are day traders. These big players work according to the economic principle and want to make short-term profits. To work efficiently here, they must always be in an opposite position to the crowd.
So if the crowd is convinced that the parity can be achieved, then everyone must buy the dollar at present. This is then a good opportunity for the big players to get out of the dollar and collect the euro at the same time. When they then push the price higher, the short traders' stops help catapult the price higher. In my next video: "The fairy tale about aggressive salespeople", we'll talk about these points in detail. Since the launch of the single currency in 1999, the average price in EURUSD has been 1.19563. The average price since 1971 is 1.07. The dollar and the euro are the most traded currencies on the stock exchange. It is disadvantageous in many respects for both the USA and the euro zone if the euro or dollar is too expensive. Of course, the euro has gotten cheaper and cheaper in recent years, but when is the best time to buy a currency if it's cheap or expensive?
The experts see the upcoming gas crisis in Europe as one of the main reasons for the accelerated decline of the euro currency. I can partly agree with that, but in the long term this will bring great opportunities for the independence of the euro zone. When the Europeans finally wake up and master this gas crisis with flying colours, dependencies on energy suppliers will be eliminated. This means that Europe can reposition itself and the euro can regain strength. Furthermore, we must not forget that EURUSD is a sideways market. In the long term, an investment in EURUSD is unprofitable, so I would rather invest in the DAX or S&P. I also created a yield triangle for the EURUSD, where you can calculate the yields. You can find the article here:
https://www.forexfactory.com/thread/...6#post14031296
The question of whether parity will be reached or not depends solely on when the big players start collecting the euro. This is exactly why you should focus on the limit orders of the big players to see what is happening in the market. News and rumors are completely irrelevant to EURUSD price action. The price rises because the big players collected the euro beforehand and the price falls because the big players collected the dollar beforehand. Of course, afterwards, the experts can always explain why the price moved up or down. But the art of trading is anticipating what will happen next.
I wish you continued success in trading
Best regards, Michael
Forget:That does not work, amateurs build the ark, pros the Titanic!
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