I’m new to this forum but I was reading your “school of pipsology” section and I think is very good specially since it addresses to newbies like myself.
I was watching the EURCHF index on my demo account today and have entered a trade being confident that once the “greek problem” is solved the single currency will bounce back quite vigorously but it didn’t in fact it went down much to my surprise.
I thought that the news was actually strengthening the euro’s position. Can anyone give me a hint on where my judgement went so wrong?
The news was bad for the Euro because they agreed to use the International Monetary Fund (IMF) as the financial force in a bailout for Greece, this points to the fact that the EMU cant afford to fund a bailout for Greece by themselves so it makes the EMU and therefore the Euro appear weak.
I had a feeling this was going to happen, I read a report a few weeks ago that the IMF announced they were to begin selling off a huge amount of gold reserves they own, I figured they would only do that if they knew they needed to raise a large amount of funds for something, I wondered if it was for the Greece problem.
Thanks SDC this is a very interesting view and probably more accurate than mine. I could not have thought about it.
I did not renounce my position because I have a gut feeling that the euro has been down to much or maybe because I have to learn how to lose.
The EU has money to bail out Greece. That’s not the problem.
The problem is getting all of the EU partners to agree to it.
The more economically solid partners don’t want to jeopardize their own tenuous financial recoveries.
Any move extended to Greece will result in political tensions if they don’t help the next hand in line.
And the fiscal cancer is spreading.
The weakness is now Portugal. And then it will be Ireland. And then Spain, and Italy… And don’t forget Belgium.
This article may shed some light on the situation for you.
Actually that may be a somewhat good buy depending on where you entered the trade.
First off the swap will help, as it is in your favor on this pair.
And secondly, since the euro is at an all time low against the chf, the most likely move won’t come from the euro side, but from the Swiss side.
There is quite a bit of talk about when, or if the SNB will intervene. It’s a problem for the Swiss side to have such an imbalance.
A sell off of the franc by the SNB would at least temporarily ease the issue, and bounce the euro up against it.
Look back on the daily chart over the last 2 months, and you will see spikes as they tried to keep the current slide from occurring.
I think you will find my original reply was correct. Your report does not answer the question which was, basicaly, why did the Euro fall yesterday in the face of news that the EU is close to agreement on a rescue plan for Greece. The report you posted is todays news, todays news doies not account for the big hits the Euro took yesterday.
The important news yesterday was that the EU was close to agreeing on a bailout plan for Greece on a 3 point plan which called for 3 conditions to be met before the Eurozone would help Greece, one of which is was large financial contribution from the IMF, this was seen as a weak plan from a Euro perspective it made it appear that the EU could not take care of its own financial problems.
This is why the Euro fell in response to that news yesterday.
It would be like the United States announcing they need international financial aid to bail out California, it would make the US look finacially weak. That is why the Euro took some big hits yesterday.
Your missing the point, I know they didnt agree in the end, the point is what news from yesterday caused the euro to fall it was that they were close to a plan that looked weak.
I think you misread my post, i said it would be like the US not being able to or not wishing to bail out Cali themselves and having to ask for international aid. Obviously if the US bailed out California themselves it would be seen as strength that the US takes care of its individual states financial problems, that is why the plan revealed yesterday for Greece was seen as weak, it involved the EU seeking international monetary aid for Greece instead of taking care of it within Europe themselves.
Dont you realise the European Monetary Union is just a stage in an ultimate plan to create a superstate, I dont know what they would call it, The united States of Europe maybe ? This all started back in the 70s with first they all joined the European common market, then each European country converted its weights and measures to Litres Kilos, Metres and Centimeters etc, and their currencies to a base 10 currency.
The next big stage was to all ditch their own currencies to form a joint currency, the Euro.
The big plan is not over yet the ultimate goal of the Pro Euro’s is to create a superstate.
That is why even though it has not got that far yet, I likened the Greece problem in the Eurozone, to California’s financial problems here, if the ultimate plan for Europe is implemented to its end, Greece would be a state in the union, the same as Cali is a state in the union here.
But even though that has not taken place fully yet, what governs them both other than a shared currency ? They both have a central bank, that controls interest rates etc, They both have a central government, the EU has the European Parliment that passes legislation for all the EU countries, they still obviously have their own government too but so does each state in the US. You might be suprised how much the EU has in common with the US and it will get more so unless the whole EU plan collapses.
How do I know all this ? I lived in Europe for 30 years, this is all common knowledge to Europeans who have had it on the news and current affairs shows for the bigger part of most of their lives.
I could not have thought about it.