EURO vs USD

[J. Abizeid]

Originally Posted by admiral

Historically speaking , the EUR/USD fluctuates the most in the period of November - January , so i dont think there will be any breather any time soon , especially when the ECB reduce its rates in December.

Now the level to break is 1.3053 , which is the 38.2% fibo retracement from its record time low at 0.822 to its record time high at 1.6050 , i expect a lot of fluctuation at this level .

Let us watch and see if the Euro will close below the resistance level of 1.325 and below the downtrend trendline at 1.33 by the end of the week , if it doesn't manage to go up and break the 1.325-1.33 level till the end of this week , there will be a very big probability it will push down to below the 1.30 psychological barrier .

As long as the US government is in the business of borrowing money, they’ll give you the illusion that your dollar is appreciating so you lend it to them instead of selling it.
Once your money becomes their hostage and no one else wants to lend them anymore, they’ll focus more on printing it. And while at it, they’ll print your money back only smaller.
I have a feeling they’ll play that game until the upcoming Bush/European summit meeting that Bush wants to avoid desperately.
As we all know, not only Asians but Europeans as well are tired of living in poverty in order to finance and bail out the dollar. The next message to Bush will be that the dollar artificial life support that started in august cannot last forever. He’ll have to start printing more money and stop borrowing.
The point is, when the treasury borrows money, it creates money supply shortage but, when forced to print it, it increases supply.
The tsunami is coming soon.



Something else we need to take into consideration.
We are living in unusual financial times where charts and statistics become unreliable. Notice how the dollar value has been fluctuation lately opposite to the DOW which means if the stock market ever goes up again the dollar must come down and balance out the effective value.
But the reality on the ground has not changed. The $700 billions bailout money that will be followed by another one and the upcoming $150 billions stimulus package that the US government doesn’t have will produce an artificial effect as dollar shortage supply while the treasury is searching to suck it out of the market but the tsunami reverse effect will trigger when the treasury money printing machine goes into high gear and floods the market with green junk money after the world tells them no more free ride.
At that time, we’ll see China and the rest of the world dump their own trillions of dollars before it's too late which accelerates the dollar demise even further.

[admiral]

Originally Posted by J. Abizeid

As long as the US government is in the business of borrowing money, they’ll give you the illusion that your dollar is appreciating so you lend it to them instead of selling it.
Once your money becomes their hostage and no one else wants to lend them anymore, they’ll focus more on printing it. And while at it, they’ll print your money back only smaller.
I have a feeling they’ll play that game until the upcoming Bush/European summit meeting that Bush wants to avoid desperately.
As we all know, not only Asians but Europeans as well are tired of living in poverty in order to finance and bail out the dollar. The next message to Bush will be that the dollar artificial life support that started in august cannot last forever. He’ll have to start printing more money and stop borrowing.
The point is, when the treasury borrows money, it creates money supply shortage but, when forced to print it, it increases supply.
The tsunami is coming soon.



Something else we need to take into consideration.
We are living in unusual financial times where charts and statistics become unreliable. Notice how the dollar value has been fluctuation lately opposite to the DOW which means if the stock market ever goes up again the dollar must come down and balance out the effective value.But the reality on the ground has not changed. The $700 billions bailout money that will be followed by another one and the upcoming $150 billions stimulus package that the US government doesn’t have will produce an artificial effect as dollar shortage supply while the treasury is searching to suck it out of the market but the tsunami reverse effect will trigger when the treasury money printing machine goes into high gear and floods the market with green junk money after the world tells them no more free ride.
At that time, we’ll see China and the rest of the world dump their own trillions of dollars before it's too late which accelerates the dollar demise even further.

You are misunderstanding my posts , in all my posts i am not predicting that the dollar will strenghten or weaken , what i am doing is analyzing the charts and concluding accordingly ,if in the near future the charts shows a euro bullish signal , i will be posting that the euro will strengthen .
Your problem is that you are only focusing on the fundamental analysis , and ignoring the technical analysis of the charts.

If you read my previous posts you will notice that i mentioned the following :

1) in 1 of your posts you were predicting that the euro will bounce back from the 1.40 level , i replied to your post by saying that the charts are showing downtrend move as long as the 1.45 -1.48 level on the upside was not broken , eventually the euro couldnt break the 1.45 level and it head down to the 1.35 area .

2) in my post last week i mentioned that if the euro doesnt break above the 1.3785 resistance level it will be heading down again , the euro twice reached the 1.3750 level however it couldnt break higher , and eventually now it went down to the 1.31 level .

3) today we are in the 1.31 level , if we will analyse the charts we can say that if the Euro doesnt break above the 1.32.5 resistance and 1.33 downtrend line there is a big probability it will be heading under the 1.30 level , if it breaks above the 1.33 level this is a positive sign .

let us wait and see if my reading of today chart was correct or not !

[Abou-Eddie]

It is 1.27876 now. Totally incredible. It seems I was wrong yesterday and the slope is even steeper and as admiral said, there is no breather at the 1.30 level. Wow, we could reach 1.22/1.25 sooner than expected. I used to say in the next 2-3 months, now I say maybe tomorrow!!

[J. Abizeid]

Originally Posted by admiral

You are misunderstanding my posts , in all my posts i am not predicting that the dollar will strenghten or weaken , what i am doing is analyzing the charts and concluding accordingly ,if in the near future the charts shows a euro bullish signal , i will be posting that the euro will strengthen .
Your problem is that you are only focusing on the fundamental analysis , and ignoring the technical analysis of the charts.

If you read my previous posts you will notice that i mentioned the following :

1) in 1 of your posts you were predicting that the euro will bounce back from the 1.40 level , i replied to your post by saying that the charts are showing downtrend move as long as the 1.45 -1.48 level on the upside was not broken , eventually the euro couldnt break the 1.45 level and it head down to the 1.35 area .

2) in my post last week i mentioned that if the euro doesnt break above the 1.3785 resistance level it will be heading down again , the euro twice reached the 1.3750 level however it couldnt break higher , and eventually now it went down to the 1.31 level .

3) today we are in the 1.31 level , if we will analyse the charts we can say that if the Euro doesnt break above the 1.32.5 resistance and 1.33 downtrend line there is a big probability it will be heading under the 1.30 level , if it breaks above the 1.33 level this is a positive sign .

let us wait and see if my reading of today chart was correct or not !

I got your point and you are doing a splendid job. I really mean it.
But here is the question: Is the melting global stock boosting the dollar or the dollar strength is sinking the stock.
As of now, the Asian market is sinking but the dollar and the Yen are rising.
Nikkei 2258,674.69 -631.56 -6.79%

Hang Seng14,610.49 -430.68 -2.86%

Straits Times1,822.16-98.63 -5.13%

[Abou-Eddie]

Oct. 22 (Bloomberg) -- The euro fell below $1.28 for the first time since November 2006 and the pound tumbled to a five- year low on speculation European central banks will cut interest rates as the global economy heads for recession.

The single European currency also slid to the weakest in more than four years versus the yen as Asian stocks declined, reducing demand for higher-yielding assets funded by loans in Japan. Sterling declined to a one-week low versus the euro after Bank of England Governor Mervyn King said the U.K. is probably in a recession.

``Expectations for rate cuts in Europe and the U.K. are growing stronger by the day because of the weak economic outlook,'' said Koji Fukaya, senior currency strategist at the Tokyo unit of Deutsche Bank AG, the world's largest currency trader. ``The euro still looks expensive. Other European currencies are also likely to fall.''

The euro fell to $1.2743 before trading at $1.2854 as of 7:30 a.m. in London from $1.3063 late yesterday in New York. It dropped to 127.01 yen, the lowest since April 2004, and last traded at 127.88 from 103.80. The euro fell to as low as 1.4872 Swiss francs, the weakest level since April 2003. Japan's currency was at 99.581 per dollar from 100.14.

The pound dropped to $1.6203, the lowest since September 2003, and traded at $1.6325 from $1.6706. It also declined for a third day against the euro to 78.75 pence from 78.17.

Argentina's planned seizure of $29 billion of private pension funds stoked concern the nation is headed for its second default in a decade.

[admiral]

Originally Posted by J. Abizeid

I got your point and you are doing a splendid job. I really mean it.
But here is the question: Is the melting global stock boosting the dollar or the dollar strength is sinking the stock.
As of now, the Asian market is sinking but the dollar and the Yen are rising.
Nikkei 2258,674.69 -631.56 -6.79%

Hang Seng14,610.49 -430.68 -2.86%

Straits Times1,822.16-98.63 -5.13%

This financial crisis that the whole world is suffering from it , showed clearly and without any doubt , that the US is still the dynamo of the world financial system , and that neither the Euro area or China or Japan is ready yet to take the burden of becoming the new world economical dynamo.

All the problem started from the US , however we have witnessed that the the Euro area and the far east suffered most , which mean that both this areas are not independent and strong enaugh economically and are still reluctant on the US economy to drive their economy.

As for you question as to :" if the melting global stock market is helping the dollar or not ." i really dont know , what i know is what the charts are indicating about the trend and direction of the euro .

[Abou-Eddie]

Originally Posted by admiral

This financial crisis that the whole world is suffering from it , showed clearly and without any doubt , that the US is still the dynamo of the world financial system , and that neither the Euro area or China or Japan is ready yet to take the burden of becoming the new world economical dynamo.

All the problem started from the US , however we have witnessed that the the Euro area and the far east suffered most , which mean that both this areas are not independent and strong enaugh economically and are still reluctant on the US economy to drive their economy.

As for you question as to :" if the melting global stock market is helping the dollar or not ." i really dont know , what i know is what the charts are indicating about the trend and direction of the euro .

You are very right in your analysis. The bottom line of recent events is that the US has once again taken financial leadership around the world in its hands, and their policy in my view is that they are going for a strong dollar to add to their previously battered credibility and strength (wahra).
Most European and emerging markets suffered much more, the American people lost a lot (call it collateral damage), but when all is said and done, the American government will come out stronger than ever. Look at it as a war that was won on most of your enemies without firing a single shot. The American people collectively had to lose 10-15-20 pct of their wealth but won a war without offering a single martyr. The money which evaporated from people's pockets all over the world is being replaced by printing new ones. The only difference is that now it is in a different pocket. It has simply changed hands.
As to the charts, I realize that you have studied them over long periods of time, which in my view is correct due to the sky high volatility which you would note if you look at shorter spans of time. But I believe that in this instance charts are not important as this is a one-off situation, a once in a lifetime event.

[admiral]

Originally Posted by Abou-Eddie

You are very right in your analysis. The bottom line of recent events is that the US has once again taken financial leadership around the world in its hands, and their policy in my view is that they are going for a strong dollar to add to their previously battered credibility and strength (wahra).
Most European and emerging markets suffered much more, the American people lost a lot (call it collateral damage), but when all is said and done, the American government will come out stronger than ever. Look at it as a war that was won on most of your enemies without firing a single shot. The American people collectively had to lose 10-15-20 pct of their wealth but won a war without offering a single martyr. The money which evaporated from people's pockets all over the world is being replaced by printing new ones. The only difference is that now it is in a different pocket. It has simply changed hands.
As to the charts, I realize that you have studied them over long periods of time, which in my view is correct due to the sky high volatility which you would note if you look at shorter spans of time. But I believe that in this instance charts are not important as this is a one-off situation, a once in a lifetime event.

if you study the Euro /USD chart for the last 20 years you will see that this pair was always fluctuating with high volatility with spikes reaching 3000 points in an interval of few month ,

I will give you some examples: in the beginning of the 90s the Euro went down from 1.4535 to 1.0344 , which is around 4100 points ,
later on in the end of the 90s the Euro wend down from 1.24 to 0.822 which is around also 4100 points.
In the beginning of the new millennium the Euro went up from 0.822 to 1.365 which is around 5200 points , and also in the year from 2005 to 2008 it went up from 1.16 to 1.60 which is around 4400 points .

So this current move is not a one -off situation or a once of lifetime event , especially that the Euro till now only felt around 3200 points from 1.60 to 1.28 , while historically its fluctuation exceeded the 5200 point barrier .

So charts are always important ,especially when you want to determine the trend of a currency or when a reversal of the trend occurs , otherwise without the charts it will be like trying to catch a falling knife.

[admiral]

Originally Posted by Abou-Eddie

It is 1.27876 now. Totally incredible. It seems I was wrong yesterday and the slope is even steeper and as admiral said, there is no breather at the 1.30 level. Wow, we could reach 1.22/1.25 sooner than expected. I used to say in the next 2-3 months, now I say maybe tomorrow

let us first wait and see if the USD will be able to establish a strong foot under the 1.30 level , since when it hit 1.27 , it bounced immediately 200 points to 1.29 , which mean a lot of buyers of Euro emerged at this level .

If by the end of this week the Euro stays below 1.30 , it means there is a big probability it will be heading lower again , however if it manage to close by the end of the week above 1.30-1.3050 level , it means there is some positive sign for the euro in the horizon.

[Abou-Eddie]

You could have made the same argument when it crossed the 1.50 and the 1.40 levels. These are psychological levels which will always bring in buyers which creates a short term stubbornness and price levels hover around there until the resistance is broken and then you see quicker movements. In this case I would give it more a range of 1.28 to 1.32 and when the resistance breaks you will see the 1.23/1.25 levels very quick.