Market Review: Roller Coaster Ride For Forex Traders - Mar 9 10 12:41 EST
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Market Review:
Roller Coaster Ride For Forex Traders
In the daily market review with TheLFB trade team, Dan Cook, Snr Market Analyst at IG Markets, looks at the impact of a swing change in risk tolerance. Catch Dan, and TheLFB trade team on ForexTV Live.
EUR/USD – Through today’s trading we have seen a very dominant dollar on what is once again a very light news day. The only fundamental announcement, one which typically has very little impact on the market, was French Trade Balance that came in slightly better than expected at -3.7 Billion Euros. Looking at the more medium term picture the price action in this pair reflects the uncertainty in the broader markets. Since the middle of February this pair has been confined to a narrow range of about 300 pips.
As is often the case when mixed fundamentals give us only the vaguest notion of what direction we may be heading, technical channels tend to develop. Currently there are mixed messages on sovereign debt, potential central bank actions, employment, housing, etc., etc. At some point this channel will break and often when this happens it produces a large move in one direction or the other. Unfortunately at this point, there just does not seem to be one sign that we can say with any degree of certainty would be able to propel a break out and even less certainty on which direction that breakout would move.
GBP/USD – After mounting a 400+ pip run the first trading week of March, the Pound is once again sliding down against the Dollar this week, giving back 50% of the previous gains. Not helping the case for Sterling Support was the release of UK Trade Balance Data that showed a deficit of 8.0 Billion Pounds. This was over 1.0 Billion worse than expected. Overall though, this report was just a mere pebble in the mountain of concern over Britain’s financial future. One of the dominating factors, and one that will not be resolved until after the UK elections later this year, is fear over political gridlock at a time when cooperation is most needed to address fiscal concerns.
Add to that the down trend which started in Mid-January has been flowing with the strength of the Amazon and there does not appear to be any respite on the horizon for the Pound. With that said, world events can spin on a dime and if the market determines what level is enough for this pair, perhaps the GBP can get some support. Currently from a technical perspective, the March 1st low seems to be the most logical place as a level of potential price support. A break below that level; however, and there is not another spot for a long way.
AUD/USD – The last few hours have seen the Aussie regain some strength and pare back the earlier losses to the USD. From a technical perspective the losses to start the week seem like a small pullback in what has been an uptrend for the AUD since February 25th (or February 5, on the longer term). A break above 0.9134 would seem to confirm that the uptrend is still intact. Currently the Aussie has the interest rate support and continues to put together strong fundamentals even in the face of Chinese interest rate tightening.
Provided the tightening by China does not result in the general slowdown of the Australian economy that was so much feared in January, there could still be a lot of upside for the AUD. The big concern here though is that because the types of policies that we saw employed in China take a while to be seen from an economic perspective, any negative results may be yet to be seen and when they are, it will probably seem as if they “came out of nowhere”. In all, the Australian economy still looks the sturdiest of those with a major, tradeable currency. The next indication we get will come early in Australia’s Wednesday trading session when Home Loans data will be released. This announcement will definitely be worth paying attention to.
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