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Contributors The Worst May Not Be Over for the Eurozone, but it is for the Euro
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It seems each day more bad news comes out for the Eurozone in some form or fashion. 

There’s been everything from the talks of the break up of the region…to the loss of the single currency to debt downgrades to bond yields going through the roof. All of this is bad for the Eurozone and will likely continue to be. 

However, I believe the worst may be over for the euro because the worst case scenario has already been factored in and because everyone has gotten on one side of this trade. 

Also, now that the Fed has all but guaranteed “exceptionally low rates” through late 2014, the U.S. dollar has once again become the ugliest of all of the currencies. We see proof of this by the breaking of the U.S. Dollar Index uptrend line breaking on its daily chart. Click on the chart to enlarge it. 

Since the euro comprises over 50% of this index, that’s a bullish sign for the euro when the dollar drops broadly against that index as it has done recently. 

In essence, the Fed is saving the euro by practically ensuring the dollar goes downward against it and most other currencies. 

So I think that while there could continue to be lots more bad news that continues to come out from the Eurozone…I’m not so convinced that its going to continue to translate into that being a “euro negative” in the upcoming months. 

I think a lot of euro short-sellers are going to be surprised as they can only see one side of the market to be on. Suddenly, they are finding themselves on the wrong side of the market and the pain is building. This will only launch EUR/USD higher overall in the upcoming weeks to months in my opinion. 

Now, with that said…my Currency Cross Trader subscribers are in GBP/USD because I believe it is a stronger alternative right now to EUR/USD. GBP/USD has double bottomed and has broken above its downtrend line. Also, GBP has had more relative strength than the EUR as shown in the EUR/GBP pair. 

So for me and my subscribers…we’re in the “better euro” right now which is GBP vs. the U.S. dollar (GBP/USD). So far, so good…

By the way, on our first two trades of 2012, we’ve made over 500 pips between the two trades…so off to a great 2012 for us. Come join us. 

Sean Hyman
My E-Book
info@worldcurrencywatch.com
Editor, Currency Cross Trader

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