Shaky Times For The Euro

[jtb790]

While the dollar has fallen across the board the euro has gained enormous strength against the dollar in the last 60 days not of its own accord though.

It appears the euro is faltering hard it is now becoming apparent that of itself it cannot sustain its high rate against the dollar.

Has anything you've come across confirm that the euro is in shaky times?

[FXToday]

Unfortunately the most recent evidence does not support this.

The latest IMM data showed a net short Euro position for the first time in over 3 years. This does not suggest that the Euro is overbought on a spec. basis

[jtb790]

Originally posted by FXToday
Unfortunately the most recent evidence does not support this.

The latest IMM data showed a net short Euro position for the first time in over 3 years. This does not suggest that the Euro is overbought on a spec. basis

FXT can you translate that into layman terms? What are you saying in basic trader terminology? (very basic )

[FXToday]

Thanks for the reply

Basically until last week traders were very short of dollars against the Euro.

This has now changed acoring to the latest information with traders long of the dollar against the Euro.

Some caution is required but the dollar cannot therefore look for a covering of short speculative positions to give it support.

This will increase the risk of another Euro push higher by early January although the yield shift will offer hope for a dollar rally later in the first quarter of 2005.

[jtb790]

Originally posted by FXToday
Thanks for the reply

Basically until last week traders were very short of dollars against the Euro.

This has now changed acoring to the latest information with traders long of the dollar against the Euro.

Some caution is required but the dollar cannot therefore look for a covering of short speculative positions to give it support.

This will increase the risk of another Euro push higher by early January although the yield shift will offer hope for a dollar rally later in the first quarter of 2005.

Hm... but if this is so are you not indicating that there are more guys short EUR/USD thus long the dollar?

if this is right more are holding buy dollar positions... wouldn't the USD go UP thus sending the EUR/USD rate down?

[eagleeye]

JTB

I've been reading your posts we agree on most issues 80-90% of the time - scary thought no?

I thought I was the only euro bear out here but I guess i've got company. The only problem is the I've got to trade the charts I've been given.

In addition I keep reading all the major banks keep taling about Euro 1.35 in the 2nd quarter.

a pure fundamental viewpoint I would surmise Euro falling.

a pure technical viewpoint - using daily charts - I see Euro trapped inside a 1.3400-1.3200 channel (at least since early December)

a personal viewpoint I underst why the US WANTS a lower USD. I also underst why the EU doesn't want a much higher Euro.

The COT charts which I've seen show me that the Big Dogs are lightening their USD shorts - but their perspective is way too long for me.

What's a trader to do?

Basically I'm waiting for 1.337 to short euro 1.32 to buy it play the channel - however given the current lack of "movement" or volatility I'll probably bag it after today.

What I find interesting is that looking at the charts last year I remember that in December EVERYONE was talking about Euro 1.30 1.35 then WHAM it hit 1.29 tanked only to make a double top in February then WHAM down to the 1.25 levels.

What has changed since then? Hmmmmm

[eagleeye]

What has happened since December 2003?

2003 rates 2004 rates
EUR – 2.0% EUR – 2.0%
USD – 1.0% USD – 2.25%

2003 Unemployment for US was 5.7% jobs were 1000
2004 Unemployment for US was 5.4% jobs were 112000

GDP for 4th quarter 2003 4.0% while GDP Deflator was 1.0%
GDP estimated for 4th quarter 3.9% while GDP Deflator is estimated 1.3%

There has been an increase in CA but I couldn’t find those numbers.

I just see increasing US indicators but a dropping USD.

[jtb790]

Originally posted by eagleeye
JTB

I've been reading your posts we agree on most issues 80-90% of the time - scary thought no?

I thought I was the only euro bear out here but I guess i've got company. The only problem is the I've got to trade the charts I've been given.

In addition I keep reading all the major banks keep taling about Euro 1.35 in the 2nd quarter.

a pure fundamental viewpoint I would surmise Euro falling.

a pure technical viewpoint - using daily charts - I see Euro trapped inside a 1.3400-1.3200 channel (at least since early December)

a personal viewpoint I underst why the US WANTS a lower USD. I also underst why the EU doesn't want a much higher Euro.

The COT charts which I've seen show me that the Big Dogs are lightening their USD shorts - but their perspective is way too long for me.

What's a trader to do?

Basically I'm waiting for 1.337 to short euro 1.32 to buy it play the channel - however given the current lack of "movement" or volatility I'll probably bag it after today.

What I find interesting is that looking at the charts last year I remember that in December EVERYONE was talking about Euro 1.30 1.35 then WHAM it hit 1.29 tanked only to make a double top in February then WHAM down to the 1.25 levels.

What has changed since then? Hmmmmm

EE I remember February very clearly. I think it is stard market noise for most big players economists to point an arrow in the current direction forecast another dime or two move months even years down the line in the same direction path.

Since it rarely happens they should disregarded.

This current rate (1.3300s) does represent a predicament for the usd euro. for many market participants as well.

I know a trader who claims he has successfully made tons of money trading both long short eur/usd for the past 2 months.

I have encountered no such success yet I have not gotten creamed. Probably a feat to some since I have been maintaining my short trade for over two months. I have sustained blistering losses.

What's a trader to do? I simply don't have the indicator capacities to open a long euro position. It has been this way since the 1.2500s where I focused exclusively on shorts. Imagine purposely missing 800 points in profits on the eur/usd climb!

Judging the stabilization we've encountered for the past 3 weeks capping at 1.3470 I could advise to nail shorts as often as possible in the 1.3400s range. On the same token we've had good retracements (downward) in the 1.3300s.

Something I am sure of: We will see the rate go to 1.2800 before we see it break 1.3500.

One thing I know: I will not call this a massive directional change until we crash through 1.2500. Until then we probably have the potential for euro bulls to move the price back up to the 1.3400s at any time.

These last 11 weeks have been extremely hard difficult work. A massive war of money slingers with many more casualties than winners on both sides.

Just for your info: The main reason I have remained shorting eur/usd not opened a long position on euro is because my indicators still point towards doing so. At the same time unfortunately I see a very strong column (channel) in a 1 day chart that I would be happy to email you.

This channel indicates a very powerful move upward in the euro/usd rate. Notwithsting the euro-zone asian-zone CAD AUD will probably disallow a further weakening of USD arresting it should euro bulls attempt to move the rate past 1.3500.

While a comforting thought I receive little comfort until this puppy goes down hard past 1.2500 - then I will start counting my cookies.