The Euro is now flirting with the
exchange rate level against the US dollar at which it was launched on Jan 1st
1999. At that time, after an initial retreat which had many commentators,
especially those of the American persuasion, looking askance at the new arrival,
it eventually took off to prove itself to be a resilient and much valued member
of the global monetary community.
Now it is back resting upon that 1.17
price level. Since rising, in 2003, from its initial drop below it, it has
often approached this rate but never again fallen through.
It may well do so on this occasion,
but the move will not be easy. There are a great many technical traders on the
scene who are only too well aware of the significance of where the EURUSD pair
is now.
On the other hand, it has, on this
occasion, resolutely broken through its 200 month Exponential Moving Average
(EMA) to the downside. This is again a first.
Interesting times.
Will
US retail sales be the catalyst for a turn?
The US retail sales report for
December was issued yesterday by the US Census Bureau. It showed, to the market’s
surprise and disappointment, that this data point had fallen to its lowest
level in 11 months on a seasonally adjusted basis.
This had the immediate effect of
weakening the US currency, as seen on the EURUSD chart above (a rise in this
pair indicates a fall in the USD). Whether or not this tendency is maintained
is another question, but the talk in the market is that interest rate rises
Stateside are, once again, in question in the short to medium term.
Often, a catalyst such as this is
just what is needed to make traders look carefully at the support level for
this pair that is the 1.17 level, discussed above, and to act accordingly.
The OmiCronFX Mandelbrot algorithmic routine neatly caught
the pronounced bounce that occurred immediately after the retail sales announcement
yesterday, having kept its powder dry up to that point. We had a similarly
profitable day in GBPUSD.
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