25 Aug 2015
EUR/USD: bulls not done yet, where is this going?
FXStreet (Guatemala) - EUR/USD has rallied to a high of 1.1536 so far from 1.1423 with the stock market coming off in to the close and the Yen dropping on risk aversion again, while commodes and linked currencies suffer.
The volatility is here to stay, while markets digest the recent moves by the PBoC who are merely focussing on liquidity management, and less concerned about trying to bail out the average Joe stock market investor, as explained by analysts at Brown Brothers Harriman, "We think the rate cut is at least as much (if not more) important for liquidity management than for equity market sentiment, from a perspective of the PBOC."
Chins is bad, get used to it
Thus, if the market has made up its mind that China has fundamental and long-term intrinsic growth problems that cannot be rescued overnight by some mere patch work from the PBoC, then there could be a period of further downside yet to come in the dollar before investors become impatient with idle money and start to short the euro again looking for a yield elsewhere.
Fed matters most
At the same time, the market will switch their concentration back to the Fed's conundrum on whether or when to hike rates, and that should be the driver yet again for EUR/USD for the medium term
Stocks need to settle before EUR/USD bears can smile
Stocks on the other hand may find some relief and traction soon, once the panic is over, as markets begin to settle for a bad-for-longer Chinese economy, and in any respect, stocks will need to settle and pick up again before a recovery can take place else where, which should remain supportive of EUR/USD.
EUR/USD: what matters next?
For the meantime, we will look out for Asia's reaction to the PBoC's rate cut and how stocks perform before we get to tomorrow's events on the calendar for the US economy. We have the US Durable Goods as well as Fed's Dudley speaking.
EUR/USD technical levels
EUR/USD is technically on the bid still and has sights for the 55 week ma at 1.1700, and the 2014- 2015 downtrend is also locate there at 1.1704. The downside has support at 1.1400 and 1.1320 ahead of the key 1.1098 support line.
The volatility is here to stay, while markets digest the recent moves by the PBoC who are merely focussing on liquidity management, and less concerned about trying to bail out the average Joe stock market investor, as explained by analysts at Brown Brothers Harriman, "We think the rate cut is at least as much (if not more) important for liquidity management than for equity market sentiment, from a perspective of the PBOC."
Chins is bad, get used to it
Thus, if the market has made up its mind that China has fundamental and long-term intrinsic growth problems that cannot be rescued overnight by some mere patch work from the PBoC, then there could be a period of further downside yet to come in the dollar before investors become impatient with idle money and start to short the euro again looking for a yield elsewhere.
Fed matters most
At the same time, the market will switch their concentration back to the Fed's conundrum on whether or when to hike rates, and that should be the driver yet again for EUR/USD for the medium term
Stocks need to settle before EUR/USD bears can smile
Stocks on the other hand may find some relief and traction soon, once the panic is over, as markets begin to settle for a bad-for-longer Chinese economy, and in any respect, stocks will need to settle and pick up again before a recovery can take place else where, which should remain supportive of EUR/USD.
EUR/USD: what matters next?
For the meantime, we will look out for Asia's reaction to the PBoC's rate cut and how stocks perform before we get to tomorrow's events on the calendar for the US economy. We have the US Durable Goods as well as Fed's Dudley speaking.
EUR/USD technical levels
EUR/USD is technically on the bid still and has sights for the 55 week ma at 1.1700, and the 2014- 2015 downtrend is also locate there at 1.1704. The downside has support at 1.1400 and 1.1320 ahead of the key 1.1098 support line.