EURUSD

Fibonacci voodoo.

i was looking at that, i hope they're right, but i have 71 for this move...

trading like a pro i see!

closed +10

yeah, and parallel channel line drawn off left shoulder...

gonna let it ride based on time of day...

Ah, they are just scalping. I still see some upside potential, provided we clear 3680 of course...

I've been waiting all week for a short on this sucker... lol

looking for another after stall or bounce. 3637 is still there but they are all getting weaker each touch. 3629 is the one a short may have trouble with.

out failed to breach 40 on 3rd attempt...

For those who are interested:
New goldman sachs fx report for corporates.
FX Views: How Much Euro Upside?

January 25, 2011

1. European Policy Makers Finally Moving Ahead of Sovereign Worries? Over the last couple of weeks, European policy makers appear to be finally moving ahead of the curve of sovereign worries. Of course many issues remain, like the growing political instability in Ireland. It also remains uncertain if and when Portugal needs external support. However, it has been many months since markets really worried about anything genuinely new. For example, estimates of worst case capital injections into the Spanish banking sector have stabilised well within the scope of the FROB, which in turn implies that Spanish government debt would remain well below 90% of GDP. At the same time policymakers continue to make progress with reform. At the country level for example, Spain has just increased pressure on the Cajas to recapitalise. And on the Eurozone level leaders will try to increase the lending capacity of the EFSF and further clarify the details of the EFSF replacement from 2013, the ESM. Details are expected over the next two Eurogroup meetings in February and March. There is even talk about liability management for highly indebted Eurozone countries in the context of a more flexible use of the EFSF. Overall, the probability of a catastrophic sovereign event continues to decline as time passes and this in turn translates into a shrinking fiscal risk premium. In the meantime, growth in the Eurozone continues to remain solid, which further helps fiscal consolidation.

2. How Much Upside in the EUR From Here? The bounce in EUR/$ in recent days has been accompanied by a notable reduction in EUR shorts as highlighted by Roman Maranets in his latest detailed piece on changes in IMM positioning. There may even be a tiny speculative EUR long now. However, other indicators of speculative positioning remain firmly skewed towards EUR/$ downside. For example 1 year risk reversals are still skewed by about 1.7 vol in favour of puts. In the historical context, the same risk reversals have shown a zero skew on average since Euro inception in 1999 and the current reading is more than two standard deviations below that average. All this suggests the potential for further Eurozone upside is significant – and this is without even talking about the Dollar. Our strongest view in FX remains that structural issues in the US will put more downside pressure on the USD. Of course the global imbalances are mainly a US-Asian story but reserve accumulation may leak more into the Euro if Eurozone fiscal policy continues to improve. And let’s not forget that the Eurozone has never had a single monthly trade deficit with the US since inception. Overall, we are very comfortable with our unchanged forecasts of a quick move to 1.40 in 3 months and then a gradual drift higher to 1.50 in 12 months. We also remain tactically long EUR/$, quickly approaching our initial target of 1.37.

3. Forgotten Risk Correlations. After a long and steady rally in most risky assets, pretty much without interruptions since late August last year, concerns about risk correlations have declined. FX markets have moved towards a much more idiosyncratic approach and the focus has shifted from risk-on-risk-off towards assessing smallish monetary policy differences across countries. This a normal development during a continued cyclical recovery and we expect this to continue. But we wouldn’t go as far as entirely dismissing the old risk-on-risk-off correlations that have driven FX markets for the last couple of years. One warning was last week’s intra-day patterns in traditionally pro-cyclical crosses like AUD/JPY. As soon as the SPX came under pressure in the middle of last week, pro-cyclical FX crosses started to sell off hard.

4. Central Banks Reacting to Inflation – Or Not – Or Late. With food and energy prices on the rise again, inflation pass-through is becoming a growing challenge for markets and central bankers alike. The basic problem for central bankers is a potential change in inflation expectations, which is difficult to predict, in particular when estimates about the size of the output gap appear particularly uncertain. For markets the additional challenge is to assess which central bank may feel forced to react and how vigorously, and with which tools. There have been rising concerns in recent months about inflation fighting credentials of some central banks and we continue to believe a number of countries are behind the curve, including India, Indonesia and Turkey. Purchasing power parity suggests that when inflation gets out of control, the loss of competitiveness would ultimately lead to nominal currency depreciation. But before it gets this far, any central bank has scope to offset a delayed reaction by a more vigorous one. Poland is a recent example highlighted by Themos Fiotakis and Magda Polan. When the NBP moved ahead of the curve earlier this month, the Zloty rallied duly. Differences in monetary policy responses to headline inflation become visible among G10 central banks as well. The ECB focus on headline inflation may force earlier action than the Fed’s traditional focus on core inflation. And the BOE seems to be at the cross roads as well after having breached its inflation target for quite some time. Flexibility seems key when looking for FX opportunities based on the differential policy response to rising commodity price inflation.

5. HIA2 Still a Very Long Way Off. In recent months there has been growing debate about a new instalment of 2005 Homeland Investment Act. At the time US companies with overseas operations could repatriate offshore profits at a very favourable tax rate, and with most of these sitting in Europe, EUR/$ came under pressure from these repatriation flows – at least that is the popular perception. However as Robin Brooks and Alec Philips point out, other EUR/$ events occurred at the same time, including Fed tightening ahead of the ECB as well as a rejected referendum on the EU constitution in France and the Netherlands. And finally, it appears that much of the overseas profits were already being held in USD. The true HIA impact on EUR/$ may therefore have been very small. Still, the current offshore profit accumulation dwarfs those in 2005 and hence one cannot exclude that HIA2 could become a USD positive factor at some stage. The problem is that there seems to be little political consensus currently for such a preferential tax cut for multinational – not when fiscal consolidation is becoming an increasingly urgent matter for the US. It may take a long time before HIA2 materialises if at all...

6. Sarkozy’s G20 Program. With approval ratings still very low after the pension reform and ahead of next year’s presidential elections, France’s G20 presidency could be an opportunity for President Sarkozy to improve public perceptions of his government. As Natacha Valla has highlighted, Sarkozy’s G20 program tries to open the debate on a whole range of issues from financial transaction taxes to a more institutionalised G20 framework. There is even the idea of tolerating more capital controls to allow the unwinding of Asian FX reserves. Sarkozy also seems to push the debate about alternative reserve currencies, which has enjoyed popularity as a theme for BRIC countries since 2009. The overall flavour is Dollar negative and suggests closer political links between Asia and Europe. Whether a hint at a “democratic deficit” in international institutions is a barely disguised criticism of the IMF remains unclear currently, but without doubt the French G20 presidency will create more noise. Whether this ultimately leads to better policy needs to be seen.

Regards,

Thomas Stolper

sidelines for now, 3637 comes in as previous resistance before the parabolic rise after CB confidence...

to me looked like a very good trade, if you BE and left it... but then never know in fx.. it will either move in asian session or retrace and drop for fomc

Big boys say to buy? That means we are nearing a top... they need to unload. lol

hmm not really, there are long for some time now(even in eurobash times).. doesn't say much. But economic view is interesting to read..

Your chart looks pretty but EUR won't go that way today. It will drop to 1.3415 (61.8%) on top of H4 Ichimoku cloud first then move up from there.

That's a quality sign on PTJ's wall in your avatar, "losers average losers" I take it you've watched the docu Trader...

for anyone who hasn't seen it, fascinating stuff...

http://www.tudou.com/programs/view/XH5W4vffBbY/

i got tl support, currently right at dpp...

really surprised ny cried off at 3680

Hi,

I'm currently testing a new broker and I have noticed that my charts aren't the same between my present broker and the new potential broker...

I don't understand how this can be... can someone help please?

Walt

Don't know how much the accuracy from GS. But last time I read UBS review, they targeted 1.3 for one month horizon even when EU is making new high. Seems those guys dont have any relation between their analyst and their internal trader. lol

But yes, the economic is interesting to follow lately. If I'm not wrong, some eu countries have bond maturity date on march. Will see how do they covering it. In fact, debt contagion is still intact even when the auctions run pretty good. But who cares? Since almost people here are day trader or even scalper wannabe

the larger candles don't agree atm. but usdx may have bottomed now. .