Forex Market Commentary
The US economy looks good ahead of Thanksgiving.
EUR/ USD back down to the 1.09 after falling 100 pips in today session. Key support has been broken and now were at the 1.0935 test which if broken will take us another 100 pips down to the low 1.08 area. Concern mounts on headline inflation in the US economy and traders expect 25 basis points to come in this December. Speaking of economic fundamentals; the spreads on the 2yr US treasury and German Bund have widened considerably the last few weeks to 1.1% whereas last year the gap was 0.7%. This pricing highlights the different between the two zones and once again points to inevitable slide of the EUR/ USD to the 1.05 very soon and perhaps parity in the new year. The ECB is set within a policy of easing money through QE. and the US Fed is seeking to tighten the money supply by issuing larger amounts of Treasuries. The two contrasting monetary policies point to further yield divergence at least for the year ahead as Euro interest rates turn negative and US rates go to at least 50 basis points by mid next year. That in turn points to EUR/ USD parity. Position traders would seek entry points for a short trade at every sudden EUR/ USD spurt and add shorts unto the 1.05 mark with call option hedges. USDX at 97 mark, WTI crude firms to 47 and gold shaves another 17 points to come in at 1117.
Read on Bloomberg growing concern of headline US inflation:
http://www.bloomberg.com/news/articles/2015-11-04/bond-market-inflation-outlook-at-six-week-high-before-yellen
Read on Reuters a conflicting report that US manufacturing is heading into recession given the higher value of the USD:
http://www.reuters.com/article/2015/11/03/us-usa-economy-railway-kemp-idUSKCN0SS26620151103
In speaking of moving averages; markets are not rational and daily price action volatile, but in the longer run trader expectation and negative sentiment can be collectively summed up through the 50 day moving average. Always look to support and resistance band lines as the key to understanding in the long and short term where prices are converging. Professional technical traders use 50 day and 200 day medium and slow moving averages as fundamental cornerstones for interpreting the direction of price action.
USDX
US Dollar
97.192 +0.280 +0.36%
Support 94.213 Resistance 98.993
Forward 1 year - 95.259s.
97.192 +0.280 +0.36%
Support 94.213 Resistance 98.993
Forward 1 year - 95.259s.
EUR/ USD
1.09600 -0.00525 -0.48%
Support 1.08173 Resistance 1.1393
Forward 1 year - 1.14600s.
1.09600 -0.00525 -0.48%
Support 1.08173 Resistance 1.1393
Forward 1 year - 1.14600s.
Crude Oil WTI
47.84 -0.06 -0.13%
Support 43.63 Resistance 48.31
Forward 1 year - 52.07s.
Forward 1 year - 52.07s.
Gold
1117.675 -17.775 -1.57%
Forward 1 year - 1,186.5s.
Pieter Bergli - DeLoren Trust Holdings
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