Today, the 1/20/2011, the forex market has been acting up. The major story in my eyes is the continuing rise of the EUR and the CHF currencies. And while the USD has shown some signs of strengthening today, this might be a one time rally.
The EUR is charging forward despite Europe’s financial debt reports and good macro economic factors in the United States.
What is the cause for the current EUR rally? How is it maintaining its global climb even when a 45 billion dollar deal between the USA and China has only been signed yesterday? Nobody can tell exactly why the EUR is so strong these days, but current trading positions appear to tilt favorably to those opting for buying long positions.
Now the CHF has had a long rally too. It has gone sky high when compared to almost any other currency pair lately. However, there are some signs that a stagnation period is starting. Will it change its current exchange rate and start trading short? I, personally and without any suggestions implied, always tend to freeze up my forex trading activity at times like these.
The foreign exchange market today is completely volatile, in my opinion. After a long positive run in these two currency pairs EUR/USA and USD/CHF in favor of the EUR and CHF it is imminent that a turning point is just around the corner.
Investors should always be careful to opt to establish short positions on these currency pairs now. Nobody knows the exact turning point for the market and many pips can be lost if you risk buying many lots.
I personally believe in letting the market determine its own course and not taking any decisions at a time like this.
Ofcourse there’s always the flip side and here’s a great example of a missed opportunity with the EUR/AUD pair. Read this great forex technical analysis about it.
