Shows the danger of trading ahead of news. The usual story would normally be that this news was already in the price - the big players had already driven the USD down and the EUR up in anticipation of this news, there was no or very little further position adjustment required.
Of course, this is always just a story from the financial commentators anyway and there’s no guarantee they have got the facts of the matter.
big institutions more than often drive the price down before doing any buying
The theory behind OBV is based on the distinction between smart money – namely, institutional investors – and less sophisticated retail investors. As mutual funds and pension funds begin to buy into an issue that retail investors are selling, volume may increase even as the price remains relatively level. Eventually, volume drives the price upward. At that point, larger investors begin to sell, and smaller investors begin buying.
from .investopedia.com
I wouldn’t really say a news release is fundamental analysis. It was slightly worse than expected, but not a huge amount.
Why do people seem to think that EUR is due a rally? I don’t see much underlying strength in it. The Italian economy is kaput and they won’t stay within the budget that the EU dictates, or even the one that they agreed. They are in big trouble and one of the biggest economies in the Euro. Greece still have a ridiculous national debt that hasn’t really dropped in 8 years. No deal Brexit is a risk to the economy, but also a big funding gap that needs to be filled to keep investment going. Germany’s economy isn’t producing good figures recenetly. France has political unrest and a pretty hefty national debt. The countries with major economies are all having shifts in the political spectrum where they’re fed up with paying for smaller countries to benefit at their expense so anti EU sentiment is growing. Statements from the ECB aren’t hawkish.
None of this points to the EURO being strong as far as I can see.
I understand your explanation, but I think it does not work like that all the time.
Your explanation fits the scenario when an economy is weak. For instance, the EURO could be weak but that could change in minutes especially when you look at a Currency Strength Metre.
The more I understand these things, the more confused I get.
A currency doesn’t suddenly get strong without some fundamental reason behind it. That may be an unexpected data release, but a sudden good data drop from the EU isn’t going to improve all of the problems that I mentioned and more. The big boys won’t suddenly start buying into the EURO unless there’s some underlying reason that they think it will be bullish
So at random the 2 manufactures in the block - Italy and Germany.
Italian manufacturing pmi thus far 2019
What about Germany, it’s pmi are reported languishing - this is true but perhaps go back a little further for context:
All well and good, but countries such as Greece, Spain etc - sunny services are a huge part of their economies - simple way the market will check is the services pmi for EZ:
I have chosen pmi because the market looks to the purchasers for guidance on what is down the road - on the other hand the algos pay little attention to journalist’s headlines.
What you are seeing here and now is the result of Trump wars with everyone else for example. That’s why you see the united states of america dollars something like 1.14 even while it was something like 1.11, correct ? Thanks in advance for that.
Nope, what you are seeing is a guy who knows how to negotiate and how to use 21st century tools to help him (even though you younger guys think that us older guys have no know-how)