Forex commentary EUR/USD January 20, 2012
I find it hard to believe the market can be this optimistic on the horror picture that is the Euro. Having said that this move up does not really surprise me. As I noted in yesterdays commentary the daily close was very bullish and it surely seems like the short squeeze is in full force at the moment. I should mention that the draft of the EU Fiscal Treaty was leaked out and could be reason for some of the optimism. However the fact that it has no teeth seems to be just what the market wanted LOL. Personally I will always side with the banks market manipulation and feel this is just a reason to push out the weak shorts so the Smart Money can load up for the coming jump off the cliff.
The talks regarding the Greek debt write down are still at a stalemate but we still keep getting reports of everything is going well LOL. If this were the case then why havent they actually made a deal yet. I did read an interesting article yesterday that seemed to make alot of sense on what the outcome will be. It mainly said there will most likely be a deal as the hold outs are forced to go along in some fashion. Be it kicking and screaming or something of the like. Then the banks will somehow skirt the idea that the rating agencies view it as a default and all will seem hunky dory for the time being until the market realizes that Greek debt is still unsustainable since the austerity forced upon it have crippled any chance of getting groath moving enough to ever pay back Greece’s debts. Of which will take some time. Another bail out is definitely in the future for Greece. You can read the article here.
There is not much on the table for news releases today. We do have German PPI numbers but with all the other issues the market will be looking at (mainly the PSI deal) I have my doubts it will move the market.
Moving on to the charts as I mentioned above the daily has had another very bullish close and looks poised to test the 1.300 level at least and possibly the 1.3050 level at the daily highs from January 3rd. There is also a possibility of some profit taking from this 300+ pip run up over the last few days since it is Friday. However I would feel better about that scenario if there was any rejection or profit taking after London closed yesterday. Most likely there will be a small retrace during Asia and then another test up to 1.3000 in my opinion. Then the possibility for profit taking at the end of the week may show its self. At this point its mixed but slightly skewed to the upside. Its most likely going to be a difficult day to trade.
Be careful out there guys