The veil of an unaffected by the credit crisis Euro-zone has been lifted and we've seen the currency lose against virtually all other currencies over the past 3 days. As banks around the world continue to lock up their lending, expectations for global markets have fallen sharply. The revaluation of the Euro has been seen to hit the hardest.
In the US, bears picked up yesterday's 485 point move and jumped back in on what's sure to be more political indecision regarding the bailout bill. The Senate votes on the bill later this evening and should send it to the House for final approval tomorrow. If the House were to finally approve the bill, we expect a large market rally-the breadth and length of that rally is up for debate. However, another no vote should send the markets tumbling again even deeper as investors are sure to be even more worried about the lack of a bailout.
And if adjusting to market conditions hasn't been a tough enough task so far for Forex traders, the job becomes even more strenuous later this week as US Non-Farm Employment Change is set to be released. A poor number is expected and an absolutely horrific number isn't out of the question. With so much volatility and market indecision, risk aversion should be key and we are again looking to buy into the Dollar as the safe-haven currency.
EURUSD - The pair has broken hard toward 1.40 and is almost certain to test lows at 1.3893. We look to sell rallies as this pair has continually waved up before taking large dips.
EURJPY - IntegrityFX Plus subscribers pulled 90 pips profit if they were following our EURJPY signal this morning. The trade broke consolidation and we sold at 148.50. EURJPY bounced at the 9/11/08 lows at 147.50, but we expect these lows to be tested again and most likely break toward 145.
AUDUSD - A break of .7800 could see this pair spiraling down toward .7300. Keep an eye on volatility and risk aversion. If the market fears a bailout bill may not happen or may not happen in an acceptable time frame, pairs such as AUDUSD and NZDUSD could suffer the most from the risk aversion.
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John Rowa
Executive Director of Trading
+1 951 823 0686 - Tel
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JRowa@IntegrityFXllc.com
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