Whats Happening with the Euro?

Hi all,

I’m a newbie to forex trading, and have had some ups and down with my demo account (mainly downs at the mo) and I’m trying to understand why my trades have moved against me (particularly Euro pairs). I’m trying to combine technical with fundamental analysis, and although the charts seem to be suggesting one direction of trade, the market seems to move the other way.

I’ve been shorting the EURGBP and EURUSD as most analysts suggest that the UK and US will be the first to raise their rates, whilst the Euro is still talking about more QE. I’ve got quite a conservative risk management strategy, in that I’m trading micro lots, and will risk no more than 1%-2% of my account (£1,000 demo). But, over the last couple of weeks, I’ve been stopped out on every occasion I’ve traded these pairs.

My question is, why does the euro appear to be strengthening, when there’s nothing fundamentally changed over the last couple of week? I guess I’m trying to understand how ‘sentiment’ works!

Thanks in advance for any comments.



hii Ian,

according to me right now what playing in the market are the risk sentiments which are triggered by the mounting concerns over slowdown in the economic growth in China and other emerging markets which is dragging down dollar with itself. and weakening dollar is helping euro a lot to strengthen its position. the risk aversion behaviour of investors is helping euro very much.
its true, fundamentally there is nothing which can lead to strength in Euro if taken the long term scenario too. Fed raising the interest rates will surely force ECB to step up its efforts and protect its currency from strengthening too much.

In this case you are mixing long-term strategy (fundamentals like raising/lowering interest rates) and short-term strategy (50-100 pips). You may be right in the long term that the euro will weaken, but 1%-2% stop loss is not enough (if, let say, that is 100 pips) since EUR/USD might go up 200+ pips before dropping to 1000 pips or more. Fundamentals and long-term strategy is good to know the overall direction of a pair, but short-term will help you find good entries/exits. For this you should try using multiple time frame (W1, D1, H4).