Forex technikal and fundamental analysis: Forex Crunch 2 Trillion Euros of Debt

May 26, 2010

Forex Crunch 2 Trillion Euros of Debt – Euro Has More Room to Fall

2 Trillion Euros of Debt – Euro Has More Room to Fall
Price Action Alert: This Trade Will Make You Hundreds Of Pips
Forex Daily Outlook – May 26 2010

2 Trillion Euros of Debt – Euro Has More Room to Fall

Posted: 25 May 2010 05:06 PM PDT

Fresh estimations about the size of Greek, Spanish and Portuguese debt to other countries stands at the huge sum of 2 trillion euros. These numbers, bigger than estimated earlier, cast a huge shadow over the Euro.

Jacques Cailloux, who is the chief European economist for the Royal Bank of Scotland, showed that the public and private institutions in these three countries that is held by external countries stands at around 2,000 billion euros, down from 2,171 billion at the end of 2009. The vast majority of the debt comes from Spain – 1,500 billion at the end of 2009. This has bigger implications:

In a blog post about this report, Tony Barber quotes from the original report:

"Any assessment of the economic impact of a sovereign default of these economies through trade linkages or through their GDP size misses entirely the point," the RBS report says. "It is the financial linkages that suggest that these economies are too intertwined with foreign financial institutions to default, a phenomenon largely reminiscent of that of subprime … in terms of the potential ramifications that a default would have across the global financial system."

So, with problematic debt reaching 22% of the Euro-zone’s GDP, the austerity measures will do little to help, and an all-European / global effort to resolve the situation must be done urgently.

Austerity measures and huge spillage of euros to avoid default in these countries are all Euro-negative. EUR/USD currently trades at “Lehman levels”, around 1.2330, after it already went down to 1.2140 last week. When the financial crisis broke out with Lehman brothers’ collapse, British and American banks were in the limelight and the Euro just suffered from risk aversive trading.

Now, the Euro zone and the Euro itself are in the spotlight, and not in a positive way. The Euro-zone hardly got out of recession, and it might fall back to it soon. No matter what steps are taken, there is still more room for

It seems that the dramatic headlines about the collapse of the Euro and EUR/USD parity have a significant basis.

Thanks to Francesc for the tip.

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Price Action Alert: This Trade Will Make You Hundreds Of Pips

Posted: 25 May 2010 05:00 PM PDT

Guest post by Jason Madison of beatwallstreetnow.com

Hello All,

I am back to alert you to another highly profitable trading opportunity emerging in the Eur/Jpy. By now you all should be familiar with the inside candle breakout technique I have showed you in previous my previous post. If not, get yourself up to speed by viewing it here.

Today I am alerting you to a potential trade that is currently forming in the Eur/Jpy. Let's take a look at a chart to see what I am talking about:

This is a daily chart of the Eur/Jpy and as you can see from the yellow lines the pair has been stuck in a inside candle patter for most of the month of may. Now the thing about these patterns in that the longer the price action is inside of a candle the larger the move is when it finally breaks out. And considering the fact that this pattern has been in effect for 14 days now. It's safe to say that when this thing breaks its going to move hard.

There no way to tell when this breakout is going to occur. It could occur today, tomorrow, or two weeks from now but when it does its going to be an amazing opportunity for profit.

Just remember not to take a trade until after the breakout occurs and then trade in the direction of the break. If this trade takes a long time to develop don't get frustrated just continue your trading as usual and remember to check on it after the close of each daily candle to see if price has closed outside of the yellow lines. Also remember the longer price stays in the pattern the larger the breakout and more potential pips for you.

And if you have any doubt about this technique then look at the chart below:

This is the same exact chart but with the previous inside candle as the focus. Look at how price moved down after the breakout. Price moved down for nearly 100 pips before there was a pull back.

Now its too late for you to profit on this trade, but I have showed you what you need to do to profit on the next. All you have to do is act. Until next time.

Happy Trading

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Forex Daily Outlook – May 26 2010

Posted: 25 May 2010 02:00 PM PDT

US Federal Reserve Chairman Ben Bernanke delivers a speech in Tokyo, US Core Durable Goods Orders are expected to drop while Durable Goods Orders are expected to rise and New Home Sales are expected to edge up this month. Let us see what awaits us today

In the US, Federal Reserve Chairman Ben Bernanke delivers a speech titled “Central Bank Independence, Transparency and Accountability” at the Bank of Japan “Future of Central Banking under Globalization” conference, in Tokyo. Expected to affect interest rates and provide hints on future monetary policy.

Later in the US, Core Durable Goods Orders is expected to drop from 3.5% in April to 0.5% while Durable Goods Orders which includes transportation items is expected to rise from -0.6% to 1.4% this month.

More in the US, New Home Sales are expected to edge up this month by 9000 compared to 411K in April continuing the positive activity in the US housing market.

Finally in the US, Crude Oil Inventories are expected a similar rise of 0.2 Million barrels this month

In Europe, Belgium NBB Business Climate is foreseen an additional rise of 0.3 points from -2.4 in April after a continuous improvement however it still requires improvement.

Also in Europe, French Consumer Spending is foreseen a drop of -0.5% comparing to last month increase of 1.2% means customers are spending less.

Later in Europe, GfK German Consumer Climate is in for a slight drop from 3.8 points to 3.7 points.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis.

In Great Britain, Nationwide House Prices measuring the change in the selling price of homes with mortgages backed by Nationwide is about to drop from 1.0% to 0.5% which affects the housing industry.

Read more about the Pound in the GBP/USD forecast.

In Australia, Construction Work Done, released quarterly, measuring the change in the total inflation-adjusted value of construction projects completed is about to increase this quarter by 1.5% arriving to 4.1%.

For more on the Aussie, read the AUD/USD forecast.

In New Zealand, Trade Balance Is expected to drop this month by 112M NZD compared to 567M in April this could affect the market since New Zealand is greatly dependent on international trade.

In Japan, Trade Balance shows an expected increase of 0.02T from last month 0.67T indicating lively market activity.

That’s it for today. Happy forex trading!

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