Topic: Finance
Forex trade signals has been quite volatile lately because of Greece's debt crisis. The fear is that this debt crisis in Greece will spread to other heavily indebted countries in the European Union (EU) like Italy, Portugal, and Spain . Because of what has occurred , there has been 11% drop in Euro currency against the US Dollar. There are a few questions we need to ask as we look at this situation : Is the Euro sell off complete and is the strength in the US Dollar because of the United States strong fundamentals or the Euro's weakness? The questions are very important because the second question's answer will have an impact on the answer to the first question.
I would argue that the US Dollar is simply benefiting right now due to the Euro weakness and only that weakness. The US consumer spending driven economy has only picked up steam because of the Federal Reserve has left rates at near 0% for quite some time now . When there is a forced raising of rates, what will happen ? Will this head wind be something the US economy can really withstand? The answer is likely no . You have to keep in mind that there is more spending right now by consumers because many consumers are simply walking away from other payments, such as mortgage, auto, and credit card payments. This allows consumers to have more income than usual so they're able to spend more on other items such as clothing, new electronic items, and meals out . Here goes the punch drunk consumers again . In the last boom inflated by the Federal Reserve it was not sustainable and again, it won't be sustainable. Inflation or default are the only two options for the US Dollar in the next several years and those two things can only mean disaster for the Greenback .
When involved in forex trade signals our goal is naturally to make money . There is no bias . We only want to use our foresight for a profit . So the second question's answer is that the Euro will hit bottom sometime because it's over sold . 1.2300-2400 is probably where it will be . In reality, do you really believe that Germany, one of the largest world economies, will allow the currency to fail? Probably not. More than likely they won't. This is the reason they aren't printing out more Euros and helping with a Greece bailout . The problems in Greece will cause the Euro to become even more sound as a currency. Investors will know that the Euro is safe because when there is trouble they take the short term loss in order to preserve long term health . So, Therefore, their economy may be having a tough time , but their monetary unit will be better for all of this . The opposite is true in the United States situation . Short term problems are being solved by printing more money, but this only causes a problem with the long term health of our money and economy .
After looking at all that , we are close to the point where you'll get the Euro for a great bargain that you should take advantage of in your own forex trade signals. Not just for all of the reasons outlined above , but market psychology tells you this as well . The professionals are always buying the market in free-fall and then the average person finds out about a crisis, comes in, and then tries to short the move that is already over. Already this pattern has happened over and over again, and as long as limbic systems are part of human physiology it will continue to occur .
David F Dacosta - Is a private trader using technical analysis to do forex trade signals & futures trading. David makes specific trade recommendations for a small select group of traders. He uses drummond geometry to make his forecasts. Click Here for training materials and a free forex trading forecast.
