As markets around the world continue to hold onto the Dollar through a growing sentiment of global turmoil and recession, EURUSD has broken every important barrier and now looks to subtract 2 years of gains. The option barriers at the 1.40 price were breeched during Thursday’s Asia session and only 1.3850-80 is eyed by investors to be any kind of important support between current prices and 1.34.
However, the sour turn for EURUSD isn’t an isolated incident. Currency markets around the world are jumping on any sneeze on CNBC or rumors coming across the wire and investors are in heavy risk-aversion mode from any market they find to be in a recession—which is becoming an easier and easier task nowadays.
Even unabashedly uber-hawk ECB president Jean-Claude Trichet finally acknowledged slowing growth, calling the euro zone’s current state a “technical” recession as the sector has seen two quarters of negative growth. Just last year, the torch of “safe-haven currency” seemed to have been passed from the Dollar to the Euro as investors steadily bought into a sentiment-driven rise to an all-time high for the EURUSD. But as the US market continues to fight its own domestic issues, investors have once again turned to the mighty buck as the safe play.
US markets continue to falter at an alarming pace—and we honestly cannot see any turn coming in the near future—but investors have acknowledged that the impact of this global recession and crisis will be felt much worse and much later for any economy not backed by the infrastructure that the US has been built back on.
While the Dollar may waver, housing may continue to slide, and the consumer refuses to buy, the fact is that the Dollar is still the Dollar. Yes, at no point in modern history has global growth ever come so fast and emerged so vastly, but as this credit crisis continues to affect every market around the globe, investors will continue to cut back on their risk and hold onto their George Washington’s, Abe Lincoln’s and Benjamin Franklin’s.
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John Rowa
Executive Director of Trading
+1 951 823 0686 - Tel
+1 951 823 0687 - Fax
JRowa@IntegrityFXllc.com Integrity FX, LLC
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