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2014-12-11
Forex Analysis


Currency Strength and weakness analysis based on 4h performance

USD, GBP and CAD continues with strong weakness
EUR and CHF showing some weakness this morning
JPY strengthen strongly
AUD still sideways then up then down
NZD continues with strength this morning

Current daily trends

AUDCHF, trend intact
AUDJPY, new trend is now confirmed
AUDNZD, trend intact
EURAUD, trend intact
GBPAUD, trend intact
USDCAD, trend intact

Possible entries for today or tomorrow

EURAUD, on increased momentum
USDCAD, on increased momentum

Some fundamentals to keep in mind for this time of the year:

Euro

As we get closer to the holiday season the markets are quieting down as traders leave their desks in search for sunny beaches. It is expected to be a quiet holiday season in the markets, which creates a hurdle for preventing massive breakouts, any trend reversals, and extending aggressive and massive trends.

What does this mean for the Euro?

Well the EUR/USD has been in a decade long wedge pattern which will be very difficult to break. There is also very little bullish patterns in the EUR/USD, which leads to an expectation that this pair might close off at the 1.22 low before the end of the year. The ECB has been trying to stimulate its currency but this has not had a massive increase on their balance sheet. More stimulus usually equals a weaker currency, and this could be followed with another selling wave. The political instability in Greece is also not helping the Euro. A crucial presidential vote next week will force lawmakers to side with Prime Minister Antonis Samaras pro-bailout government, or leftist radicals who have vowed to tear up the bailout.

The Euro can make for an interesting trade next week, as investors might be looking for safer heavens elsewhere.

Having said that, the ECB will wait until the first quarter before announcing what steps they will take to increase their economy. 

USD:

There were some losses in the Dollar yesterday following a shakeout of bullish positions. Might be because investors found incentives to take profits as year-end is getting closer.

The USD/JPN also saw a massive drop to 117.90 from a missive 7 year peak of 121.86 set on Monday. It returned to the 119 mark again, but still bearish patterns appearing on 30 min charts.

The dollar’s climb in Oct/Nov was very steep, so adjustments like this were bound to happen.

The Fed announced that it is still on track to begin raising interest rates in the latter half of 2015. This is a positive view hold by the market.

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