All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

Euro Holds Its Ground Despite Unsatisfactory G7

Last updated 2/8/2010 2:51 AM ET (GMT -5) 1 Comments

• Share this:

Boris Schlossberg

Director of Currency Research, GFT

The G7 meeting over the weekend produced no concrete proposals on the resolution of the Greek crisis leaving the currency market adrift at the start of the Monday trade. The G7 officials also discussed the possibility of an additional 15bp tax on the financial sector to help raise revenue after last year’s massive fiscal stimulus plans across the G-7  universe resulted in record deficits for all member nations.

Although the details of the possible tax were not yet available, the prospect of yet another levy on the global money centre banks will likely put further strain on capital markets if it should ever become actual law. The EUR/USD opened down in Asian session hitting 9 months lows at 1.3620 before rebounding sharply on short covering flows at the start of European trade.

Although the euro remains pressured by the political and fiscal upheaval in the union, the currency is now grossly oversold after declining for 12 out of the last 15 days. The latest data from  CFTC shows that euro positioning has turned strongly negative with shorts growing to 43.7K contracts from 39.5K the period prior. The increase in shorts is now at a record in the series and argues for some sort of technical bounce as late comers get squeezed.

With no economic data on the calendar on both sides of the Atlantic the FX market is likely to consolidate with flows driven by equity market movements and official commentary. With Dow staging a late session recovery on Friday any move to recapture the 10,000 level later today will be positive for risk and could provide EUR/USD with further upside potential as late shorts scramble for cover.   

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

• Share this:

Comments (1)

Mike

February 08, 2010 at 07:09 AM ET

it's ranging time between low and 1.3720

Add Your Comment

Please login to post a comment or sign up for an FX360® account.

Loading...

About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.