
After last week’s dramatic fall in the Euro (EURUSD), the pair has taken
a breather and a retrace seems to be on the cards, driven perhaps by market participants who believe that the collapse was overdone.
The next big event in relation to the Single Currency is the monthly
European Central Bank (ECB) statement, due next Thursday. It will be quickly
followed by the delayed US Non_Farm Payrolls report, out the following day.
Both of these have the potential to move EURUSD in a profound manner. There are
two considerations: (1) Euro zone inflation is well below the “Close to but not
more than 2%” target that the ECB has as a mantra, and (2) the Non Farm
Payrolls report will cover the period that was affected by the government
shutdown in early October.
So what are the implications for these?
(1) above will tend to allow the ECB to ease off on its monetary policy
in some way (reducing the target interest rate is only one of them) and (2)
will possibly mean that a low NFP figure will be discounted somewhat, while a
large one will be seen as more positive than normal because it will have been
so in spite of the shutdown.
All of these things, if they come to fruition, can only have the effect
of lowering the EURUSD pair further. The upward trend is half broken (lower low
on the chart above) and the fundamentals are pointing down, as discussed. For
this reason we have set the OmiCronFX Silver Trigger routine on this pair, but
with a high momentum trigger. This means that it has a bigger hurdle than
normal to overcome in terms of market momentum in order to put on a trade. As
the retrace gets larger we will loosen this criterion.
I always trade with EUR/USD pair. never tried another.
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