Thanksgiving was all but calm..
Dear Friend/Fellow Trader,
Most thought that the Thanksgiving holiday was going to be a period of calm and serenity for the US markets, but what happened this morning told us a whole different story.
The EUR/USD finally broke through 1.3000, the all important psychological level that failed to break earlier this year, and rallied all the way up a little past 1.3100 before losing momentum. The pullback after the rally was quite limited, however, as the pair closed around 1.3095. The GBP/USD also staged an impressive 200+ point rally, tripping large stops and taking the pair past 1.9300.
There was also massive carry trade liquidation as the USD/JPY was brought down to the 115's and the USD/CHF down to the 1.20's, most likely with even more liquidation coming up after the Thanksgiving weekend.
Anyone who went short the USD against the majors would've made a killing in the past week, which was particularly surprising given the lack of US data due to the Thanksgiving holiday. This is another case where capital flow totally dwarfed the fundamentals.
The question now is, how much more USD selling will there be in the upcoming week? I would caution anyone who is considering going long EUR/USD at this stage to keep stops a little tighter than usual as a strong Euro is anything but beneficial to businesses in the Eurozone, being a net export region. We may see some central bank intervention if the EUR/USD continues to rally. The GBP/USD would probably be a little safer to go long, because the UK is less export dependent, so the strength of the currency wouldn't have as large of an effect as it does in the EuroZone or Japan, which are very net-export.
Just remember to keep proper risk management strategies in place and you'll save yourself from being wiped out by sudden trend reversals.
I'll try to be posting a little more in the upcoming weeks, but I've been tied up with some personal issues lately, which explains the huge time gap in between this post and the previous.
Stay tuned!
To successful trading,
Dickens
Most thought that the Thanksgiving holiday was going to be a period of calm and serenity for the US markets, but what happened this morning told us a whole different story.
The EUR/USD finally broke through 1.3000, the all important psychological level that failed to break earlier this year, and rallied all the way up a little past 1.3100 before losing momentum. The pullback after the rally was quite limited, however, as the pair closed around 1.3095. The GBP/USD also staged an impressive 200+ point rally, tripping large stops and taking the pair past 1.9300.
There was also massive carry trade liquidation as the USD/JPY was brought down to the 115's and the USD/CHF down to the 1.20's, most likely with even more liquidation coming up after the Thanksgiving weekend.
Anyone who went short the USD against the majors would've made a killing in the past week, which was particularly surprising given the lack of US data due to the Thanksgiving holiday. This is another case where capital flow totally dwarfed the fundamentals.
The question now is, how much more USD selling will there be in the upcoming week? I would caution anyone who is considering going long EUR/USD at this stage to keep stops a little tighter than usual as a strong Euro is anything but beneficial to businesses in the Eurozone, being a net export region. We may see some central bank intervention if the EUR/USD continues to rally. The GBP/USD would probably be a little safer to go long, because the UK is less export dependent, so the strength of the currency wouldn't have as large of an effect as it does in the EuroZone or Japan, which are very net-export.
Just remember to keep proper risk management strategies in place and you'll save yourself from being wiped out by sudden trend reversals.
I'll try to be posting a little more in the upcoming weeks, but I've been tied up with some personal issues lately, which explains the huge time gap in between this post and the previous.
Stay tuned!
To successful trading,
Dickens
posted by ForexDragon at 1:15 PM
0 Comments:
Post a Comment
<< Home