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Euro In a Tug of War at 1.3800 As Traders Await Deal

Last updated 10/19/2011 4:18 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

The currency markets were in a state of suspended animation at the start of European session trade as conflicting news regarding the expansion of the EFSF created wild two way swings the EUR/USD during Asian trading. The pair first soared to a high of 1.3810 at the end of North American dealing on reports by the Guardian newspaper  that EZ officials reached an accord to expand the EFSF ahead of the EU summit this weekend. That story however was quickly denied and the EUR/USD quickly reversed its gains fueled further to the downside by downgrade of Spain by Moody’s. It quickly found support in Asia at 1.3720 and has proceeded to climb back to session highs on optimism that some sort of an accord will be reached this weekend.

With economic calendar essentially barren during the European session, the summit continues to be the primary focus of trade in the currency market with sentiment evenly divided between skeptics and optimists as details of any deal remain unknown.

The pair continues to find resistance at the 1.3825 level, but  a break higher could open the way for test of 1.3850 and possibly even 1.3900 as the day proceeds if optimism grows that EZ officials will be able to deliver a massive inc-erase in the EFSF that could backstop the EZ periphery credit markets and act as a stimulant to the EZ economy as a whole.  

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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.