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EURUSD1! trade ideas

The Demise of Euro Is Not Greatly ExaggeratedCME:6E1! The U.S. dollar reached 1:1 parity with Euro on Tuesday for the first time in 20 years. Wall Street may tell you that the common currency for 19 European countries has been hammered by economic woes, high inflation, and an energy supply crisis brought by the Russia-Ukraine conflict. I have a very straight-forward answer to the depreciation of the Euro. It is in a simple mathematical formula. In economics, Interest rate parity (IRP) states that the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. The formula for IRP is: F0=S0× , where: F0=Forward Rate, S0=Spot Rate; ic=Interest rate in country c; ib=Interest rate in country b Inputs : The Fed raised rates three times from 0.0%-0.25% to current target of 1.50%-1.75% (ib). Meanwhile, the European Central Bank (ECB) maintains a deposit rate of -0.5% (ic). Before the first Fed rate hike in March, the Euro/USD spot rate was 1.04 (S0). Output : Plug the data into the IRP formula, you will get a forward rate of 1.017 (F0). This matches the observed exchange rate after the June rate hike. New Output : The market expects the Fed to raise another 75 bps on July 26th-27th. If we replace 1.75% with 2.50% in ib, the new Euro/USD forward rate would be 1.0096 (F1). Let’s explain this in plain English: An investor has the option of investing in either U.S. dollar or Euro. With higher rate, dollar asset produces a higher return. To make Euro more attractive, the investor would need more euros per unit of U.S. dollar. Therefore, Euro depreciates against the dollar. This is the logic behind IRP. It is called the Law of One Price . If we believe that the Fed would keep raising interest rates, and it would do so at a faster pace than the ECB, then Euro would continue to fall. By how much? You could try to work out your own estimate by plugging in different Fed and ECB interest rates at the IRP formula. I recognize that many factors would impact exchange rates. A framework using IRP is a simplified but effective way to construct a FX trading strategy. All the other factors can be viewed as variables influencing the rate decisions. Asides from the mathematical approach, we could consider a country’s currency to be reflective of its economic strength. Looking back at the last two decades since Euro’s inception, the European Union, and the Euro Zone in particular, has been outpaced by the United States in terms of GDP. Taking the GDP in 2000 as a baseline index 100, the U.S. has now reached 155, while the EU (excluding Britain) is at 133, and the Euro zone at 128, according to an analysis by the Economist. Whether it was the Subprime crisis in 2008, or the debt crisis in 2010, it took the EU economy much longer to recover comparing to the United States. Brexit raised a red flag of the long-term viability of a political and economic union of independent countries. If history is a guide, I can’t find a good case where one common currency existed among multiple nations for an extended period of time. Exceptions could only be found between an empire and its colonies. Europe would strive, but would a common currency need to be there? A short position in CME Euro-FX futures (6E) is a way to express this bearish view. The March (6EH3) contract may be a good choice. It was settled at 1.02415 on July 12th. There are five Fed meetings between now and contract expiration. Each rate-setting decision could potentially shock the Euro into further decline, in my opinion. Each contract has a notional value of €125,000. CME requires an initial margin of $2,400. For a short position, a decline (increase) of 1 basis point (0.01%) in the exchange rate of Euro will result in $12.50 in gain (loss) in your account balance. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME:6E1!Short
by JimHuangChicago
2
EU Futures Long as smart money loadsWas in long earlier in the week but could see smart money was going to load at lower prices so closed with small profit and re-entered 20 pips lower at 1.0460. This chart also illustrates the importance of the Gann 2 day swing chart rule for predicting prices. As you can see the counter trend lower happened right on the 50% and now the rejection of the C-D move which indicates sign of strength. Also keep in mind we have triple bottoms on the daily and weekly along with 2 months holding at the same low level indicating a sign of strength for now.
CME:6EU2022Long
by BoccaLupo
Potential Bearish ContinuationOn the H4, with price moving below the ichimoku cloud and in a descending trendline, we have a bearish bias that price will continue to drop from the pivot at 1.05470 at the pullback resistance in line with the 50% fibonacci retracement to the 1st support at 1.03665 at the swing low in line with the 61.8% fibonacci projection and 78.6% fibonacci projection. Alternativly, price may reverse off the pivot and rise to the 1st resistance at 1.06560 at the multiple swing highs in line with the 61.8% fibonacci retracement. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
CME:6E1!Short
by Rockqet
DON'T BE DECEIVED BY THE LOWER TIME FRAMES BULLISHNESS OF EURO.🦊¶REDFOX CAPITAL™¶🦊, EURO FUTURES TA On a MARCO level technical perspective only this rings bearishnes even the deaf could hear it. Euro have been on a downward spiral for several months now with some bounces here and there like the one we are seeing on the LTFS don't be fooled by it. My object here is to SHORT only! I want to see late shorts get taken out in form of Liquidity before I SELL!!! #Redfoxxx AKA #BrilliantBrianThaBrianiac
CME:6E1!Short
by RED_FoX_OF_WS
1
Potential Bearish ContinuationPreferred Case: On the H4, with price moving in a descending trendline and below the ichimoku cloud, we have a bearish bias that price will drop from the pivot at 1.0668 at the pullback resistance and multiple swing high in line with the 61.8% fibonacci retracement to the 1st support at 1.0364 in line with the swing low and 78.6% fibonacci projection. Alternative scenario: Alternatively, price may reverse off the pivot and rise to the overlap 1st resistance at 1.0791 at the multiple swing highs in line with the 78.6% fibonacci projection and 50% fibonacci retracement. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
CME_MINI:E71!Short
by Rockqet
Out of resistance comes strengthSince we last covered Euro Dollar in our Timing is everything! piece, the pair has traded lower, playing out exactly to our assessment and hitting both of our price targets. However, things have changed quite a bit ever since. Inflation has skyrocketed in the EU and the ECB seems ready to start playing catch-up on rate hikes. Looking at the charts, the Euro Dollar pair has been trading in a triangle pattern with prices bouncing off the support multiple times but failing to breakthrough. The 1.0400 level seems to mark the longer-term resistance, which has been tested multiple times but held strong. We see these as confirmation of a strong resistance. With prices close to the resistance now, we favor the long side in the short term and expect the pair to make its way to the top of the triangle. Entry at 1.04880, stops at 1.03575. Target at 1.0630. Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
CME:6E1!Long
by inspirante
Euro FX Futures (6E1!), H1 Potential for Bearish DropType : Bearish Momentum Resistance : 1.05355 Pivot: 1.05125 Support : 1.04285 Preferred Case: On the H4, with price moving below the ichimoku cloud and within a descending channel , we have a bearish bias that price will rise and drop from the pivot at 1.05125 in line with the pullback resistance and 23.6% fibonacci retracement to the 1st support at 1.04285 where the swing low support and 78.6% fibonacci projection are. Alternative scenario: Alternatively, price may break pivot structure and head to the 1st resistance at 1.05355 where the pullback resistance, 50% fibonacci retracement and 23.6% fibonacci retracement are. Fundamentals: Due to ECB President Lagarde stating that it was unlikely the Euro zone could go back to an environment of low inflation, we have a strong bearish bias towards Euro.
CME:6E1!Short
by Genesiv
Potential for Bullish MomentumTitle: Euro E-mini Futures ( E71! ), H4 Potential for Bearish Momentum Type : Bearish Momentum Resistance : 1.0790 Pivot: 1.0654 Support : 1.0428 Preferred Case: On the H4, with price recently breaking the ascending trendline and moving below the ichimoku cloud , we have a bearish bias that price will drop from the pivot at 1.0654 in line with the 50% fibonacci retracement , to the 1st support at 1.0428 at the swing low in line with the 61.8% fibonacci retracement . Alternative scenario: Alternatively, price may reverse off the pivot and rise to the overlap 1st resistance at 1.0790 at the multiple swing highs in line with the 78.6% fibonacci projection and 50% fibonacci retracement .
CME_MINI:E71!
by Tickmill
Potential for Bullish MomentumTitle: Euro E-mini Futures (E71!), H4 Potential for Bearish Momentum Type : Bearish Momentum Resistance : 1.0790 Pivot: 1.0654 Support : 1.0428 Preferred Case: On the H4, with price recently breaking the ascending trendline and moving below the ichimoku cloud, we have a bearish bias that price will drop from the pivot at 1.0654 in line with the 50% fibonacci retracement, to the 1st support at 1.0428 at the swing low in line with the 61.8% fibonacci retracement. Alternative scenario: Alternatively, price may reverse off the pivot and rise to the overlap 1st resistance at 1.0790 at the multiple swing highs in line with the 78.6% fibonacci projection and 50% fibonacci retracement.
CME_MINI:E71!Short
by Genesiv
Potential Bullish ContinuationTitle: EURO E-MINI FUTURES ( E71! ), H4 Potential for Bullish Rise Type : Bullish Rise Resistance : 1.0790 Pivot: 1.0545 Support : 1.0428 Preferred Case: On the H4, price is moving above the ichimoku cloud and in an ascending trendline which supports our bullish bias that price will continue to rise from the pivot at 1.0545 at the pullback support to 1st overlap resistance at 1.0790 in line with 78.6% fibonacci projection and 50% fibonacci retracement . Alternative scenario: Alternatively, price could drop to 1st support at 1.0428 where the 61.8% fibonacci projection and swing low support are. Fundamentals: no major news
CME_MINI:E71!
by Tickmill
Potential Bullish ContinuationTitle: EURO E-MINI FUTURES (E71!), H4 Potential for Bullish Rise Type : Bullish Rise Resistance : 1.0790 Pivot: 1.0545 Support : 1.0428 Preferred Case: On the H4, price is moving above the ichimoku cloud and in an ascending trendline which supports our bullish bias that price will continue to rise from the pivot at 1.0545 at the pullback support to 1st overlap resistance at 1.0790 in line with 78.6% fibonacci projection and 50% fibonacci retracement. Alternative scenario: Alternatively, price could drop to 1st support at 1.0428 where the 61.8% fibonacci projection and swing low support are. Fundamentals: no major news
CME_MINI:E71!Long
by Genesiv