Chinook's EUR/USD (E/$)Mumblings

Baruch · Mar 26, 2005

Quote from mtzianos:

Baruch, I read these comments about "fundamentals" from you and other posters here, and I have to wonder.

By fundamentals do you mean the INTEREST RATE DIFFERENTIAL that exists now between USD and Euro?

If so, how would you explain the behaviour of Yen (which has the lowest nominal interest rates) during the past couple of years. Had there not been the massive interventions by BoJ, Yen would have appreciated much more than 25% vs the USD.

If you don't consider IRD but something else as "fundamentals", please specify which ones that would be.

Personally, I don't think that Euro is "undervalued" vs USD (especially if EuroZone loosens the Stability Pact), but the true USD funnymentals are so alarming and deeply rooted, that I can't see how USD will escape from losing 30% to 50% of its purchasing power in the not so distant future.

Note I said "purchasing power", perhaps the exchange rate of USD vs Yen or Euro will stay at these levels (1.25 - 1.40)

With fundamentals I mean the world's macro economy. Including US rate hikes (and a strong economy), non-growth in Europe and big problems with The Stability Pact. I don't agree with you that US fundamentals are so alarming. Maybe I am wrong, but I don't care so long the market is on my side. Most of the time I just folllow the flow and the trend.

Andy62279 · Mar 27, 2005

well there's a breakout on the short side... wonder if it'll continue or develop into a reversal

Ivanovich · Mar 28, 2005

Quote from mtzianos:

, that I can't see how USD will escape from losing 30% to 50% of its purchasing power in the not so distant future.

Every time I hear someone say something like this, I think back to that quote: "The market can remain irrational far longer than traders can remain solvent."

Baruch · Mar 28, 2005

Quote from Ivanovich:

Every time I hear someone say something like this, I think back to that quote: "The market can remain irrational far longer than traders can remain solvent."

Yes, and good, old Keynes was right.

Gringinho · Mar 28, 2005

Hehe, so true Ivanovich ...
I think a little flip up to 1.3000 would be fitting right now.

What hurts the most is what goes, it seems; with trapping moves .. the big chop still for some time.

Comfortable staying with a lower profile for now. Geopolitically it is still very interesting. If al-Zarqawi is caught or not shouldn't give any rational boost to markets - because of the "old news factor" - but so jumpy we've gotten - who can afford not to react if the train seems to be leaving the station. That's what feeds the environment of the big chop we have now, I reckon. Any excuse or false signal - then reversing because of the weakness - no true fundamental or lasting impact on markets.

illiquid · Mar 29, 2005

Closing out euro short and going long eur and jpy tiny with stop at day's lows. No conviction at all.

Andy62279 · Mar 29, 2005

Quote from illiquid:

Closing out euro short and going long eur and jpy tiny with stop at day's lows. No conviction at all.

euro is showing a nice buy setup on 1hr chart. I'm waiting for the pound to retrace to complete my setup.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=47209&perpage=6&pagenumber=3
Check out the chart Chartist posted. Same conditions are occuring on most majors on 1hr chart. Reversed trend doesn't always follow through, but are good opportunities.

Cutten · Mar 31, 2005

Quote from trade-ya1:

In my opinion, the long-term trend is the most powerful force in the universe of trading. It won't break easy. When it does, I'll happily go the other way. Wish you good trading as well. I enjoy a healthy, respectful exchange (rate).

So far during this long-term uptrend, there have been two corrections of about 12 big figures. That means either you have to have a stop of >12 big figures, or that you have to be able to predict short-term price action sufficiently that you can get out when one of these big corrections is going to occur, without getting whipsawed or missing the major trend.

If the long-term trend is the only signal, then you have to be riding out these huge retracements. If you are not riding out these retracements, then you are using something other than the long-term trend to make your trading decisions (at least on your exits/stops). Thus, the long-term trend is not quite as important as you make it out to be - at times, following it can expose you to major loss, even when the trend remains intact and ultimately reasserts itself. Of course, when it finally reverses, relying on it will cause even bigger losses.

Gringinho · Mar 31, 2005

With the "flip" over 1.3000 away, what can be next ?

I think more range-based action until some of the geopolitical issues gets fired up again is most likely.

A trickle down to the mid 1.27s again is not too far away - while 1.32-ish seems quite high considering the off-season oil-price highs and the preceding South Korean central bank news.

Cutten · Mar 31, 2005

Quote from Gringinho:

With the "flip" over 1.3000 away, what can be next ?

I think more range-based action until some of the geopolitical issues gets fired up again is most likely.

A trickle down to the mid 1.27s again is not too far away - while 1.32-ish seems quite high considering the off-season oil-price highs and the preceding South Korean central bank news.

I agree. I would be looking to buy on a break of the recent lows around 1.2750-2800. In fact I could see it going back to the breakout level of around 1.25. IMO that would represent a reasonable buy spot, assuming no major shift in fundamentals. I was long from higher up but exited at a loss after the Fed statement. Since then it has been all one way - dollar rally.