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Razor Analysis EUR/USD

EUR/USD Bias: Down

Trading Signal: Waiting

Market Analysis:

Happy Friday the 13th! Yesterday we saw retail sales come out slightly better than expected. There is a consensus that this was simply an aberration resulting from heavily discounted post-holiday sales. I agree and I think the better retail sales in no way changes the economic outlook.

Today we saw the monthly U.S. consumer sentiment survey come out of University of Michigan. The survey was down a few point from economists' expectations, indicating the persistence of increasingly worrisome consumerism.

The real buzz currently circulating is about the U.S. spending plan, or stimulus package conjured up by House speaker Nancy Pelosi, President Barack Obama, lawyers and many others who have not navigated business in the private sector and are unlikely to fully grasp the business of economics. The bipartisanship the President had hoped for is simply not there, as the bill finds little support among Republicans. The real strategy of the spending plan is to replace lack of spending by consumers with government spending, thereby stimulating the economy. This in essence forces taxpayers to spend when they should not be, since taxpayers will end up footing the bill with higher taxes and more economic turmoil down the road. Of course if you throw a trillion dollars at the economy you should be able to sort out some positive effects. I think most informed Americans realize just how irresponsible this legislation is and that our underlying problem is unsustainable consumption, which Democrats are now bent on artificially and forcible raising in exchange for short-term benefits. Needless to say, markets have not responded favorably and seem to have little faith in the new U.S. strategy.

Technical Analysis:

Daily Chart

The daily chart shows unmistakable bearishness . The 5 period exponential moving average moved beneath the 15 period exponential moving average on January 6th and has remained since. Support can be found in the range of 1.2700 to 1.2820. Long wicks of price rejection at resistance levels can be seen moving progressively lower, from 1.3320 to 1.3080. Moves toward previous daily highs may be exploited with short positions, while breaches of previous daily lows should be viewed as potential shifts in support...

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EUR/USD Analysis for 02/16/09

EUR/USD Immediate Term Bias: Up

EUR/USD Post-Immedate Term Bias: Neutral

Trading Signal: Trade in Progress; See Open Trade Center

Market Analysis:

The G7 meeting produced little to speak of and does not offer much in the way of coattails to ride. The many stimulus packages recently announced, along with a multitude of otherfactors make it likely German economic sentiment will print gains for a second month when the ZEW indicator is released on Tuesday. In a cautious tone the European Central Bank has cited abrupt rate changes as a mistake, while asserting they stand ready to take whatever action becomes necessary to promote economic stability.

In the US, GM announced unless it receives more handouts it will be forced to file for bankruptcy. It does make one wonder if all that time spent waving an American flag to promote sales might have been better spent engineering vehicles that could compete with their Japanese counterparts.

Meanwhile, the latest market fad has been US Dollar strength. There appears to be some consensus that the flight to U.S. treasuries as a save haven will soon end and contribute to an unraveling of Dollar gains. Whatever the case, true fundamentals do not point to the strength we have seen continuing in the longer term picture versus currencies like the Euro.

Technical Analysis:

Daily Chart:

Our bias on Friday turned out to be accurate quite quickly, as price dropped from it's position as the top of the channel before the end of the day, and then well over 100 points by market open on Sunday. The daily chart still indicates downward pressure with strong support in place above the 1.2700 level, begging the question as to whether the current channel will remain intact.

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Hourly Chart:

Hourly activity has been very rangebound with a bull run up to approximately 1.2820 which suggested a potential change in immediate trend, and current bearish looking price action. Price on the one hour chart has also established a distinct sub-channel of the larger daily channel, and currently sits near the lower threshold. Immediate term moves look to have a higher upside than downside, since bearish moves have not carried support shattering volatility.

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EUR/USD Analysis for 2/18/09

In the worst global economic disaster in modern history, worse than expected economic reports tend to be priced in...Basically, we have seen worsening prints on sectors of housing and production, while the U.S. President introduced more flagrant and quixotic spending measures...Our call to short the EUR/USD yesterday even in oversold territory has proven solid, however the profit target has not yet been reached so only time will tell. Candle patterns are quite bearish, as daily highs have yet to touch the median of yesterday's high/low. The daily 5 period exponential moving average in white continues to leave the daily 15 period exponential moving average line in blue in the dust as price...

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