EUR/USD Forex major battle?

[Filipe Maduro]

Hello to all forex gods, masters and wannabes!

So I have been following this battle EUR/USD for some weeks, and well, economists and freelancers who predicted this major breakdown for euro, have been profiting a LOT.

I am at the moment playing in the demo account making some calculations and trades, and I wonder, will the Euro keep falling down or will it rise? Or at the moment is the market too unstable to make any investment?
I confess I am scared with the news of more financial control here in Europe, since they mean that the fall of the euro may be ending, and soon it will rise or at least will stabilize.

Anyway, answers and comments will be much apreciated!


DISCLARIMER: If this kind of thread isn't allowed here, please delete it or move it but make sure you email me, thank you. Understand that I am still a rookie.
My english isn't good, but I make an effort everyday to improve it.

 

[Forexwatchman]

Hi Filipe

Good to see you are playing it safe by learning to trade a demo and by asking around for input on this complicated crisis going on in the Euro Zone. Many analysts will paint a bleak picture for the euro because the problem with Greece and most of the other P.I.G.S. nations is not that there isn't enough money to pay back the debt, but rather that that money is only another loan thus the cycle continues to spiral further and further out of control. In other words, its an issue of solvency (paying your debts on time) rather than liquidity (supplying or accessing more money fast).

So what these nations are up against is being able to implement strong and long-term austerity measures such as freezing salaries, increasing taxes, and eliminating bonus pay for years and years in order to increase their debt to GDP ratio. That's obviously a nightmarish solution to the problem, but it's got to happen. On the bright side, a cheaper euro means cheaper goods and thus exporting their goods to nations outside of the euro zone should become easier and thus provide new market share for those nations. It should also decrease competition from U.S. imports as that becomes less economical due to the dollar's strength.

I could go on and on and never arrive at any conclusions, but as a trader that's the mind set to have: Never believe in your own hype. No one really knows where the market is going from one day, week, or month to the next. At the end of the day the market is always right and you can only hope that you're right there with it a majority of the time. We will definitely see the euro weaken further for reasons I just mentioned above, but there will be plenty of developments to cause it's momentum to change coarse week by week. Ultimately we will find a bottom (we have currently reached the 50 fib. line for the all time high/low of the euro) and once we get there we will range perhaps 500 to 800 pips before the next wave of either selling or buying begins to take the euro in a new direction. I hope that helped give some perspective, good luck with you forex journey.

 

[Pharaoh]

Looks to me like the Euro's problems will continue for awhile (I have a Forex Magic 8 Ball and I almost know how to use it). The question is, will the US or other countries also end up with some new economic problems that are worse. Forex is all about comparisons. If the US hits a new economic downturn, the dollar might drop faster than the Euro.

 

[jcris522]

Risk Aversion

In the investment world the U.S. dollar has always been viewed as the safe haven investment, U.S. treasury bonds, while not highly profitable and sometimes not profitable at all, are considered the safest investment, basically where investors park their money in times of economic upheaval and wait until the storm has subsided. When investors began to buy large amounts of treasury bonds the dollar strengthens and that is currently what is happening with the eur/usd and other usd pairs. Once investors think that things have stabilized, their "risk appetite" comes back and the dollar loses strength. This is why even in 2008 when the U.S. economy was tanking, the usd was strengthening and now while Europe is tanking the usd is once again gaining strength. It will take investors a long time to gain back the trust in the European economies and so in the long term the usd will probably continue to strengthen against the eur with retracements and corrections along the way, so waiting for a retracement back up and building a position until it hits a top and continues back into it's downtrend could be a strategy one might use.

 

[ali syed arsalan]

I was sleeping when euro was falling and it fell on me so heavy that i broke $2500 in 3 hrs.