By: Christopher Lewis
The EUR/USD pair continues to fall as the Thursday session was just another fall in value for the common currency. The European Union is starting to have several problems appear at once, and as a result it really shouldn’t be a surprise that the pair is falling. Spanish bonds are starting to widen the spread versus German ones, and now we have the Dutch bonds starting to become a bit more expensive in the CDS markets as well. The Netherlands is one of the most stabile economies in the EU, and this is a truly worrisome sign for the bulls. After all, the bond markets come before anything else, and will move all other markets much of the time.
The Dollar on the other hand has been gaining in strength overall. The US economy continues to be one of the strongest of the large economies at the moment, and as the rest are struggling, money will continue to flow into the US. This should obviously play a factor in this pair, and as a result I expect it to continue falling over time.
1.30 And Non-Farm Payroll Friday
Today is Non-Farm Payroll Friday in America. It also happens to be Good Friday, so the volume may be a bit lower than usual. This can lead to strong moves as the liquidity simply won’t be there. In normal circumstances, the pair would more than likely rise with a good number, but it is different now, as the European Union has so many issues. A strong job market in the US simply sends even more money into the US. Conversely, if there is a bad number, this pair should still fall, as traders buy into the Treasury markets.
The initial reaction will be interesting. Any knee-jerk spike in this pair will be sold by me, as the pair is simply sick at this point. Also, I see 1.30 as a major area to contend with. If it gives way on a daily close – we are looking at 1.26 in short order from what I can see.
