forex EUR-USD Fundamental Analysis

After a long years of devaluation for the US dollar, it is now pay back time. The dollar is moving on the right track in searching for the ideal equilibrium point against any other currencies in the world such as Euro, Pound Sterling, Japanese Yen, Aussie dollar, etc.

A small improvement of the economic data in the Euro zone did not even make any impact on the Euro-Us Dollar pair. As you can see below comparison of Euro Zone economic data figures and the movement of Euro-USD still very much stronger.

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Forex daily technical analysis -

EUR-USD

The pair is defying the direction of technical analysis for the rest of last week due to strong fundamental impact on the market. As a result it follows the down trend direction way too early where it should be undergoing correction process between 1.3164 and 1.3711 support resistance level.

As of today it the pair direction is still hanging in the balance without clear direction where it should go. The possibility of moving up or down is still unknown as fundamental influence can easily the market into turbulence. By rights based on technical perspective the pair should be going down gradually at small scale retracement at every twist and turn.
Intermediate Trend (Weekly time frame) - Upside correction
Long trend (Monthly time frame) - Down or bearish trend
Today direction - Unknown (due to fundamental disturbance)

GBP-USD

Likewise the pound-dollar pair also following the same course of direction as eur-dollar during last week movement but in a smaller scale. Unlike eur-usd it is only having a minor correction and still having the chances of moving up to continue intermediate terms retracement.
As of today still we cannot determine the clear direction as fundamental factors i.e. economic data release can affect the movement in any direction. However based on technical perspective we the market should be moving down to 1.4603 level and then continue the intermediate term process upside.
Intermediate Trend (Weekly time frame) - Upside correction
Long trend (Monthly time frame) - Down or bearish trend
Today direction - Unknown (due to fundamental disturbance)

AUD-USD

The only pair between that going the right direction for retracement is this australian dollar-us dollar pair. It follows correctly the intermediate correction process for the rest of last week. You can see this as the market moving upside following the slow stochastic. On weekly time frame candlestick is getting smaller indicating the market is weakening to move further upside. However we will never want to underestimate an overbought situation if the fundamental factors affect the market so much.
As of today we expect correction downward to 0.7142. Or if not then it could be still moving upside to go for overbought.
Intermediate Trend (weekly time frame) - upside intermediate correction
Long Trend (Monthly time frame) - down or bearish trend

EUR-USD Post Analysis - After Non Farm Payroll.

It has proven again that the market make a brief upwards movement before making continuation further downside after the Non-Farm Payroll release data last Friday February 07, 2010. This is one significant observation to take into account when trading in Forex.

This experience is taken from several observations of the NFP news release. I have no concrete evident why the market generally behaving this way, but i have a personal opinion that the technical traders are out of the market briefly to safeguard their profits and give way to the NFP or the news traders to take their turns. Consequently after the impact within 15 to 30 minutes later technical traders will be involve again in the market based on their analysis.

As a result of the technical traders action the market is briefly moving upwards last Friday. Then making continuation after that.

So just remember about the NFP is a dangerous lottery moment where technical traders are not so interested to trade. Only the gamblers love this moment, its like flipping coin game where 50:50 chances involve. If you are lucky you could be making a lot of money within 5 minutes range. Otherwise is also true for the unlucky :)

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Greece bailout: What will happen to the EUR-USD?

There are hot media speculations about Greece bailout plan to help the country to restore its financial credibility. An estimated of €110 billion Euros bailout is expected to be given to the Greece government by the help of European Union fellow members and IMF. Direct correlation of this event to the forex market movement give me a great concern, as i am trading on the bearish trend all along at the moment.

So the main concern here the impact of the financial aids to the movement of EUR-USD bearish trend. From technical analysis point of view i expected at least two possibilities that may happen when the bailout is pass to the Greece government.

1. Strong upwards movement that will defy all the indicators that helps to keep the bearish trend. That means there will be long sharp spike upward and the aftermath of this scenario either permanent or temporary. If the result is permanent Uptrend will likely to start from here or otherwise downtrend will continue.
2. If the figure of the bailout is lower than expected then there could be short sharp spike and the market will then quickly normalize to continue its downtrend direction.

This is serious and dangerous situation to be in as traders are very cautious about taking their money from the market to avoid unexpected losses. Strong market turbulence will affect the EUR-USD at some point, so be wary and keep up to dates with the financial news and economic calender.

Note: In certain occasion the market may move ahead of the event or sometimes during the event announcement itself. So nobody can really tell exactly when the big market traders will make their move. In this case i will wait for the first move and analyze indicators position to make ride along with the next move.

ADP Non-Farm Payroll: Pause point for EUR-USD

Strong bearish signal has pushed the EUR-USD deep to oversold position, but is it going to stop soon when the Euro Zone market open or continue going down until the US session open during the ADP non-farm payroll news release.

All technical indicators such as MACD and stochastic still showing fairly strong bearish in all major time frames (daily, weekly, monthly). Approximately 400 pips or about 400% down from the previous Monday position. This means the long-term downtrend is very much underway with minor hurdles along the way.

Using the oversold position and Indicators signal we can assume the following.

1. Oversold position = The market is looking for correction as some traders might be taking profits on this level
2. MACD & Stochastic Down = It will go further down if traders choose not to take their profits yet.

Based on MACD and Stochastic signals i have the feeling that the euro-dollar may continue to move down even when the Euro Zone market open. This is because some traders might still believe in the signals given by the indicators since it is very strong and ignore the correction hint. However during the ADP Non Farm payroll news release the market is expected to have a brief pause here. And this could be it, the point of correction will take place. So we will see what the European traders will do.!!

ADP Non-Farm Payroll: No correction for EUR-USD

My bad!! Yesterday was one of the few technical analysis failures that didn't go the way i want it. I was expecting the EUR-USD making correction after the ADP Non-Farm payroll and ISM Non-manufacturing PMI economic data released but instead it went further down to new low level at 1.2797.

This is highly oversold position!!

As of today, the market still showing no sign of correction and all major indicators signal are strong on the downside. At this point i still believe there must be corrective move initiative underway to normalize the market movement. That will certainly happen if the bearish traders are considering to take their profits today.

However nothing is certain because the bearish strength is so strong which could lead to further encouragement for short selling. Traders who have already profiting from the trend ride will not take their profits too early as long as their trailing stop is not hit by the minor market correction. They will continue to ride with the market flow not and will not throw their chances of extra profits if the market move further down.

Anyway here is the technical analysis:

Daily Time Frame:
MACD = Down
Stochastic = Down
B. Band = Bottom
Summary: Strong signal of MACD and Stochastic giving the 100% boost to downtrend in short-term

Weekly Time Frame:
MACD = Down
Stochastic = Down
B. Band = Bottom
Summary: Strong signal of MACD and Stochastic provide strong bearish in the intermediate term

Monthly Time Frame:
MACD = Down
Stochastic = Down
B. Band = Between middle and bottom (Premature position)
Summary: Strong signal of MACD and Stochastic provide strong bearish signal in long-term. In addition Bollinger Band position is prematurely stand between middle and bottom line thus stronger chances for the pair to move down further to the bottom band.

Support Resistant: The pair is approaching significant long-term support level at 1.2671 which is something important to watch. At this point indicators usually fail to provide signal of the immediate reversal initiative when long-term traders are considering to take their profits.

Overall Summary: It is possible that the EUR-USD will be going down all along this week.

Breaking News - Euro breakup talks!!

The Greece financial crisis and the spiraling impact on other fellow members of the European union has led to the growing speculation of potential disintegration of the Euro currency. An estimated of 860 billion-euro debts total combined from all the European Union led by Greece is big financial dilemma that seems to have no solutions at the moment.

Based on Bloomberg report the main reason caused this problem is the uncontrolled taxes and spending among some of the European Union country members which led to mounting debts.

If the integration of Euro indeed happen this would be a historical failure of one of the greatest idea in Europe financial history. And in fact the Quote for EUR-USD that we all love the most will no longer exist in forex trading.

I just hoping that all European Union members will find out a good solution to this problem and maintain the stability of Euro. This is because EUR-USD is the most stable and highly predictable to trade in forex.