Wishing everyone a very Happy 2012 – it’s going to be a real roller coaster with lots of volatility and potential for some great trades. If you are planning to make any New Year trading resolutions then you should include one which ignores 99% of what is said and written in the media. Stick to your charts & your own analysis – it’s just as good as the “experts” Here is what they are saying about the eurodollar:
“The euro’s resilience for much of 2011 baffled many analysts, and to the chagrin of funds that bet against the currency. Some attributed it to several factors: inflows into safe haven German bonds; currency diversification by emerging market central banks away from the dollar; and capital repatriation by European banks retrenching from operations outside the region.
Analysts expect the euro to come under more sustained pressure in the first half of the year. The single currency will fall to 1.28 against the dollar by the second quarter of 2012, according to a median of 41 analysts surveyed by Bloomberg.
However, analysts still differ markedly on the euro’s direction, highlighting the dangers of shorting the currency. While Nomura expects the euro to fall to 1.20 against the dollar by the second half of the year, and Standard Chartered predicts 1.22, JPMorgan’s analysts predict the euro will recover to 1.34 and BNP Paribas’ to 1.35. ”
Our charts show the eurusd still heavily bearish on daily chart & at more or less same level as Jan 2011. In addition given the level of negativity towards the euro it’s still holding up remarkably well and any talk of parity is premature as the 1.20 price point is a key level. In the meantime cftc data showing record euro shorts as hedgies appear determined to take the currency lower.