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.

EUR/USD Hit By Profit Taking as Eco Data Provides No Support

Last updated 3/20/2009 7:14 AM ET (GMT -5) 0 Comments - Add your comment

• Share this:

Boris Schlossberg

Director of Currency Research, GFT

Top Stories

• EU meeting fails to mention any stimulus package
• Japan on holiday equities mixed
• Dollar heads for largest weekly loss against the euro
• Oil at $51/bbl
• Gold at $957/oz

Overnight Eco

• NZD Visitor Arrivals 2.9% vs. -7.4% last
• NZD Credit Card Spending -1.9% vs, -2.2% last
• EUR German PPI -0.5% worse than -0,2% forecast
• EUR IP -3.5% vs. -3.8% forecast

Event Risk on Tap

• CAD Retail Sales
• CAD New Motor Vehicle Sales

Price Action

• USD/JPY skyrockets to 95.60 on profit taking of dollar shorts
• AUD/USD near 6900 as bid remains
• GBP/USD drops through 1.4500 after dollar rally
• EUR/USD profit taking kciks in but 1.3550 comes in a support

On a very quiet night of trade with Japan markets closed for a holiday, EUR/USD held its ground, for most of the early European session pivoting around the 1.3700 level.  However news of  a weak EZ Industrial Production  report triggered a  slew of stops and the pair  tumbled to 1.3550 within a matter of minutes by midday European trade.

Eurozone Industrial Production contracted further in the month of February losing -3.5% versus expectations of -3.8% drop. On a yearly basis industrial output fell -17.3% vs. forecasts of -15.5% decline. The news was hardly surprising to the market given the continuing complete collapse of global demand.

As we wrote earlier, “The data suggests that the regions industrial sector which is responsible for the majority of export growth remains mired in a deep recession and will likely aggravate the already dismal GDP dynamics in the 16 member union.  This week rally in the EUR/USD which put the pair on the path to 1.4000 will only exacerbate the situation for the regions beleaguered producers putting the additional strain of higher exchange rate differentials on products that face lackluster demand.”

The news certainly weighed on the euro in the short term and provided the fundamental catalyst for some sorely needed profit taking after the pair climbed more than 700 points in less than two days. Nevertheless, despite the downdraft the euro remains well bid as the dollar heads for its worst weekly loss  since the Plaza Accord in mid 1980’s.

With the US calendar barren today, the pair is likely to remain range bound for the rest  of the day as traders jostle for positioning in anticipation of a run to 1,4000. The euro is now trading on anti-dollar flows alone and therefore a move to 1.4000 will necessitate further bad news from US. For now the markets appear to want to consolidate this week’s massive move before taking their next directional cue.  

Also, if you did not catch President Obama on the Tonight Show last night pitching his economic stimulus plan, here is the video:

FX Upcoming

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.

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.