Well, I am reading here and I am surprised so many of you are in favor of EUR/USD short trades.
I think everyone here realised the recent pull-up from the 1.1900 level was due to a large CB demand.
Tell me, why you think these guys buy now if they could buy at your expected 1.1300 level (!)
I do not want to be too pessimistic here, because sh*t happens all over, but do you really think the short term support level for EUR/USD is 1.1600? Serious?
Let me tell you this: I expect the pair to go up to 1.35 in the short term now and through the 1.6000 level next year.
There are many significant signs of a trend change. These are:
1) Inflation in Japan works against any intervention from BoJ. On the contrary, BoJ will favor strong Yen now. (Read Japan FinMin Tanigaki today's statement) The result could be devastating. Japan could liquidate it's dollar reserves!
2) There is no obvious relationship between the current account balance and the USD weakness. We observe the growing deficit along with the weakening dollar. The weaker the dollar the bigger the deficit.
3) China, per Mr. Snow's political request, is about to make its currency free-floating which may move the trade deficit higher. Some serious players think this will create a pressure towards even a higher deficit!
4) The US economy is heavily dependent on debt. The huge amount of last years GDP was due to the Household Debt increase. The majority of the debt was the mortgage growth.
Today we observe a downfall of the mortgage application index at MBA since the rate increase in August. (3.5%) This creates a worrying environment of market liquidity shortage and creates a real danger of slower growth in 2006. Significantly slower GDP figures, well bellow the market expectations, and WELL BELLOW THE BUDGET PLAN for the fiscal 2006!
5) All above may lead to slower CPI growth in the beginning of 2006 and force the FED to cut. I must not mention what would happen to the dollar index afterwards.
6) The weakness in DOW shows a slow liquidation of long positions over the last 12 months. I expect the situation to get worse and eventually a step downfall within next 2 months.
7) The net capital position during the last 2Q of 2004 and the 2 first Q of 2005 show a slight negative balance thus may be the primary reason for the FED to tighten. (Instead of the inflationary pressures)
I think everyone here realised the recent pull-up from the 1.1900 level was due to a large CB demand.
Tell me, why you think these guys buy now if they could buy at your expected 1.1300 level (!)
I do not want to be too pessimistic here, because sh*t happens all over, but do you really think the short term support level for EUR/USD is 1.1600? Serious?
Let me tell you this: I expect the pair to go up to 1.35 in the short term now and through the 1.6000 level next year.
There are many significant signs of a trend change. These are:
1) Inflation in Japan works against any intervention from BoJ. On the contrary, BoJ will favor strong Yen now. (Read Japan FinMin Tanigaki today's statement) The result could be devastating. Japan could liquidate it's dollar reserves!
2) There is no obvious relationship between the current account balance and the USD weakness. We observe the growing deficit along with the weakening dollar. The weaker the dollar the bigger the deficit.
3) China, per Mr. Snow's political request, is about to make its currency free-floating which may move the trade deficit higher. Some serious players think this will create a pressure towards even a higher deficit!
4) The US economy is heavily dependent on debt. The huge amount of last years GDP was due to the Household Debt increase. The majority of the debt was the mortgage growth.
Today we observe a downfall of the mortgage application index at MBA since the rate increase in August. (3.5%) This creates a worrying environment of market liquidity shortage and creates a real danger of slower growth in 2006. Significantly slower GDP figures, well bellow the market expectations, and WELL BELLOW THE BUDGET PLAN for the fiscal 2006!
5) All above may lead to slower CPI growth in the beginning of 2006 and force the FED to cut. I must not mention what would happen to the dollar index afterwards.
6) The weakness in DOW shows a slow liquidation of long positions over the last 12 months. I expect the situation to get worse and eventually a step downfall within next 2 months.
7) The net capital position during the last 2Q of 2004 and the 2 first Q of 2005 show a slight negative balance thus may be the primary reason for the FED to tighten. (Instead of the inflationary pressures)
