
Our chart this morning might
look a little busy, but it is worth paying attention to. It shows the strong
relationship between the presence or otherwise of Quantitative Easing (QE)
expectations in the USA
and the exchange rate between the Euro and the US dollar. It also shows that
indications of the possibility that tapering might not actually take place,
after the last FOMC meeting, were already in the public domain since July. Yet
the widespread expectation that tapering was to be announced at that meeting
somehow took hold.
On the technical analysis
side, this pair is now firmly trending upward (higher highs and higher lows
indicate a trend), after a breakout from the channel that had been formed
previously. How long it will last, or how high this trend has to go remains to
be seen. We might have to wait for the next Non-Farm payrolls report on October
4th next to get new news.
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