Last two weeks are very quiet, low and liquidity make all traders feel so bored. I even couldn’t win any position because most currency pairs hold in a tight range and there is no signal of big change. EURUSD , USDCAD , USDCHF , and GBPUSD fluctuate in a range of 60 pips. The best perform last week is AUDUSD: Aussie lost 0.6% its value versus the greenback because of negative CPI + bad China PMI. Everything would change this week, with a lot of economic data from US, EU, UK, and Japan, the will come back and attract more traders enter the FX market.
Actually, with a lot of economic data are released this week, has no meaning because market participants mainly eye on the data, any levels could be broken any time, so I almost ignore TA this week and concentrate analyze fundamental.
Before going to detail, I recap what happen last week.
Once again E/U ignores all US economic data, and very sensitive with EZ data. It favours EZ data and seem show emotionless toward US even Mario Draghi speech. I indeed sympathize Mario Draghi; this is not the first time he tries to bring down E/U; clearly he dislikes the current level of E/U, and market sets the barrier for E/U: no matter what it moves, 1.40 level must be hold. The reason why E/U is still very high is current account surplus: capital inflows regularly into Eurozone, and there is no signal of stop. Hence, the more good performance of EZ economy, the more capital inflows this region. That why E/U shows very sensitive with EZ economic data. But why does E/U reject US data?. Simply, US is not a country of current account surplus, US is always in deficit state, so we couldn’t use current account to explain why E/U ignores US data. There is one financial asset of US attracting investors from around the world to buy: T-Bond . Last month, I didn’t see any clue of improvement of 10 year T-Bond: severe weather and low didn’t encourage investors holding USdollar to buy T-Bond . We need the improvement of 10-year T-Bond to balance the current account surplus of EZ, and good US economic data would drive E/U lower.