Hi, guys!

This week might be good for carry trades, so the EURO may look for new highs against the USD.

For those that are not familiar with carry trades, a carry trade is selling a currency with low interest rates to buy a currency that yields bigger interest rates. USD currently has a 0.25% interest rate and EUR has a 2.50% interest rate, so many traders are still buying EUR with dollars, and keeping positions overnight so they get the difference between the interest rates (2.5 – 0.24 = 2.25%). The AUD and NZD also have the highest interest rates (4.25% and 5%), so that’s why they’ve been rising.

Also watch the price of oil, because that could influence the EURUSD (oil goes up, US pays more for oil, so the dollar weakens).

Cheers!

EUR traded at 0.9505 pounds today. I was saying in some previous post that I am expecting EUR and GBP to come at parity in the next months, but now I will be bold and I say: EUR and GBP will come to parity before the end of 2008. That is, EUR will touch 1.0000 and possibly exceed that level and be stronger than the GBP.

Hey there,

Yesterday, the Fed cut interest rates by 75 bps, reducing them to virtually zero. US interest rates are now 0.25%.

The European currency surged 1144 pips against the USD in 5 days. That’s an enormous move in just 5 days. Also, EURO touched 0.9050 level against the GBP, the greatest level on record. So, my assumption that we will see parity in the EUR-GBP sometime in 2009.

Today we have important news for the GBP and other minor news on the EURO, USD and CAD. I will not trade during news and I will just watch how they change market sentiment. Also, today is the OPEC meeting and investors are expecting a cut on production and a rise in oil prices, up to 75$ per barrel. That would drive the EURO up against the USD.

Overall, today I am looking to buy EURO at the lows (especially at 1.3840 – 50% fib level, if it goes that low). Possible profit targets are 1.4150, 1.4360 (38.2% fib) and ultimately 1.4550. So, EUR is still bullish and I will go with the trend. I think the dollar bullishness has ended this week.

Good luck!

EURGBP touched 0.9000. The highest value was in 1995, when it traded at 0.9019. I am looking for a breakout of this area.

Enjoy!

Update: Well, I was part of history, guys. I bought EURGBP at 0.9001, but I got too chicken to stay in the trade to see what happens next. It’s pretty much just a gamble. So I closed with a 7 pip profit. I have a sell limit at 0.9019, because I am asuming that will be a strong resistance, at least once or twice, before price decides to break that and head for 0.91.

The Fed is expected to lower the interest rate by another 0.5% tomorrow, so we could see further weekness in the dollar this week.

So the best strategy for this week could be to sell USD with tight stops (so buy EURUSD, sell USDJPY etc.)

Cheers!