UK EU Membership Questioned
Srdan Sore
It is no secret now that the UK wants to obtain a better deal out of their UK membership as Cameron promised a referendum on the subject as early as this year and judging by the polls the outcome is quite uncertain.  The same uncertainty is surrounding the effects of a so-called Brexit in the... Read more
It is no secret now that the UK wants to obtain a better deal out of their UK membership as Cameron promised a referendum on the subject as early as this year and judging by the polls the outcome is quite uncertain.  The same uncertainty is surrounding the effects of a so-called Brexit in the sense that it is not clear yet if such a move will turn out to be a negative one for the Britain or not.  From our point of view it is definitely a bad decision as UK on its own will have a tough time facing US, China and Russia from both an economic as well as a military point of view.  This weekend’s EU summit will have a lot of discussions surrounding the subject on the agenda and all eyes are going to be on Monday’s opening to see how market will react to any possible deal to be announced.  From a technical point of view, the GBPUSD was bearish all week with little or no bounces despite the fact that the CPI (Consumer Price Index) or inflation came in better than expectations and the unemployment rate printed another multiple years low.  Euro In a Bullish Stance Despite the fact that virtually the whole week the Euro in general has been traded with a negative tone, the EURUSD is moving to the downside to retrace around 50% of the previous triple zigzag that stopped at the 1.1380 area and this says much about what we’re expecting next. This triple zigzag is not supposed to be completely retraced so we should rule out any move into the 1.08 area again. Therefore, the more it moves to the downside, the more he will buy it in the eventuality that the pair will finally break above the 1.14-1.1500 level.  There is a strong belief that the pair is moving only when the ECB (European Central Bank) is doing something.   How I Traded Euro This Week  The other Euro pairs, like EURJPY and EURGBP are acting bullish as well with the first one forming a double combination on the weekly chart that is poised to break higher while the last one is trading in a so called running corrections for a second wave that is supposed to be followed by an aggressive move higher. In plain English, only call options were traded for the two pairs with various expiration dates. FOMC Minutes Failed To Bring Volatility It turned out the FOMC minutes this week brought nothing but more uncertainty in the sense that the Fed is hesitating more and more regarding the plan to hike rates four times this year.  One thing is turning out to be interesting when it comes to the Fed: if a couple of months ago it was virtually impossible for the Fed to talk about negative interest rates, as it was a tabu subject, now more and more Fed members are suggesting that if things turn out nasty, such a move should not be ruled out.  It should come as no surprise considering the ECB, SNB and BOJ are into negative territory, not the mention the Nordic countries in Europe so once the ice has been broken, who really knows where things are going to stop? Or, to be more exact, what is the difference between -0.1% and -0.5% or even more? The idea behind these negative interest rates is to make banks lend more but so far it seems that people are still not keen to hold on cash and it turns out banks profitability is at stake.  The period ahead is going to be a difficult one as the focus now it is turning to Europe and what the ECB is going to do. 

UK EU Membership Questioned

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It is no secret now that the UK wants to obtain a better deal out of their UK membership as Cameron promised a referendum on the subject as early as this year and judging by the polls the outcome is quite uncertain.  The same uncertainty is surrounding the effects of a so-called Brexit in the sense that it is not clear yet if such a move will turn out to be a negative one for the Britain or not.  From our point of view it is definitely a bad decision as UK on its own will have a tough time facing US, China and Russia from both an economic as well as a military point of view.  This weekend’s EU summit will have a lot of discussions surrounding the subject on the agenda and all eyes are going to be on Monday’s opening to see how market will react to any possible deal to be announced.  From a technical point of view, the GBPUSD was bearish all week with little or no bounces despite the fact that the CPI (Consumer Price Index) or inflation came in better than expectations and the unemployment rate printed another multiple years low. 

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Euro In a Bullish Stance

Despite the fact that virtually the whole week the Euro in general has been traded with a negative tone, the EURUSD is moving to the downside to retrace around 50% of the previous triple zigzag that stopped at the 1.1380 area and this says much about what we’re expecting next. This triple zigzag is not supposed to be completely retraced so we should rule out any move into the 1.08 area again.

Therefore, the more it moves to the downside, the more he will buy it in the eventuality that the pair will finally break above the 1.14-1.1500 level.  There is a strong belief that the pair is moving only when the ECB (European Central Bank) is doing something.  

How I Traded Euro This Week

 The other Euro pairs, like EURJPY and EURGBP are acting bullish as well with the first one forming a double combination on the weekly chart that is poised to break higher while the last one is trading in a so called running corrections for a second wave that is supposed to be followed by an aggressive move higher. In plain English, only call options were traded for the two pairs with various expiration dates.

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FOMC Minutes Failed To Bring Volatility

It turned out the FOMC minutes this week brought nothing but more uncertainty in the sense that the Fed is hesitating more and more regarding the plan to hike rates four times this year.  One thing is turning out to be interesting when it comes to the Fed: if a couple of months ago it was virtually impossible for the Fed to talk about negative interest rates, as it was a tabu subject, now more and more Fed members are suggesting that if things turn out nasty, such a move should not be ruled out.  It should come as no surprise considering the ECB, SNB and BOJ are into negative territory, not the mention the Nordic countries in Europe so once the ice has been broken, who really knows where things are going to stop?

Or, to be more exact, what is the difference between -0.1% and -0.5% or even more? The idea behind these negative interest rates is to make banks lend more but so far it seems that people are still not keen to hold on cash and it turns out banks profitability is at stake.  The period ahead is going to be a difficult one as the focus now it is turning to Europe and what the ECB is going to do. 

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