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Monday, 29 June 2015

EUR/USD trending down now

Greek banks are closed pending referendum on the most recent creditor proposals. Euro has fallen against the Dollar in consequence.

EUR/USD Support Line S has been breached and Resistance Line R has bent downwards. We can say that EUR/USD is trending downwards.

Greece, however, will not be allowed to leave the Euro. Real negotiations about the Greek economy will now commence. There will be a write-down or long extension of Greek debt and, eventually, resources will be directed towards stimulating (rather than depressing further) the Greek economy.

Essentially the large countries of the EU, particularly Germany, benefit most from the Single Market and Single Currency. To work, there has to be transfer of funds from the centre to the peripheral areas - the original EU idea until recession and Merkel focussed on narrow national goals.

Thursday, 25 June 2015

Dow set for a fall

Chart shows a vertical line at or around 1 Jul of every year since 1998 (DIA: Dow Industrial Average ETF).

More often than not, the Dow falls around this time of the year (unless it has already fallen in the last two months). The faster it has risen in the previous period, the harder the fall tends to be.

This year the July fall is likely to be the start of a considerable correction, given that the graph has risen to a spectacular height and that rising interest rates are imminent.

Wednesday, 24 June 2015

Monday, 22 June 2015

EUR/USD resistance flattening

Even if not as early as September, American interest rates will rise fairly soon anyway, putting downward pressure on EUR/USD, and the market knows it.

Resistance is flattening and the price may be contained below $1.14.

IMF and Eurozone support for the Greek economy will continue along its thorny ride for several more years. Resolution of the current crisis will but be a postponement of a real solution for another time.

I can't see the Support Line holding, and anticipate the graph swinging to the bottom of the yellow box.

Thursday, 18 June 2015

EUR/USD spikes after Yellen interest rate restraint

Early in March 2015, I predicted an uptrend of the Euro against the US Dollar, on the basis that the Dollar had risen too high. I sketched a rebound of EUR/USD potentially symmetrical to its previous downtrend (blue triangle). I offered the opinion that the Greek crisis would not prevent the rise of EUR/USD, because it was not about the Euro, but about the Dollar.

Then came better news of the American economy and talk of an imminent end to ZIRP, possibly as early as Sep 2015. Rising American interest rate, while Euro clings to ZIRP would kill the EUR/USD rebound.

All eyes were on Janet Yellen yesterday, with the expectation that interest rate rise would be indicated from September. Instead, she indicated a continuance of Zero interest rate for the present. As a result, EUR/USD spiked.

However, in Europe the Financial Ministers meet today again with no end in sight to the Greek crisis. Today should see a reversal of yesterday's spike, even if temporary.

Monday, 15 June 2015

EUR/USD to trend down on promise of early USA interest rise

Promise of an early rise in USA interests rate is likely to confirm that the upwards movement of the Euro against the US Dollar is coming to an end and EUR/USD now commencing a downtrend.

Monday, 8 June 2015

EUR/USD trends upwards and swings down

Optimism about Greece seems to have pushed the Euro upwards against the US Dollar. The current trend is upwards. It is now due a downswing. Will the upward trend be sustained? I doubt it. The Dollar zone is promising an imminent rise in interest rate, maybe as soon as September, while the Euro zone is only beginning its ZIRP and QE. The pressure has to be for the Dollar to rise in the months ahead, even as the DOW and NASDAQ falter.