EUR and GBP – A Long Term Look
February 8th, 10:05 am by Guru Team
Written by UKtrader
This is my first blog on eToro’s new blog feature. Just to introduce myself, I have been trading on eToro for the last 4 years now. I have two accounts on eToro’s OpenBook, santoshtiwari, which is managed by my wife, Poornima, and uktrader, which is managed by me.
I am planning to cover in this blog our analysis, strategies and the factors which we take into account before making trading decisions.
Main Currency pairs – EUR/USD, GBP/USD, USD/CHF, EUR/CHF
Analysis – We are closely watching the news updates coming from the Eurozone about Greece. This news has the potential to cause some good spikes or drops in the coming days. However, it needs to be correlated with US financial results and treasury yields. We have to keep in mind that unlike ECB, the US Fed is quite open to taking a decisive and varied action to control the market.
We usually try to avoid predicting markets but here is our long term (2-3 months) view:
We are expecting GBP and EUR to rise in coming months up to at least May 2012. Please note that this is a long term view and does not rule out the sharp spikes or drops happening due to fundamental news. These views are not suitable for a day trading which is much more volatile and needs a closer watch of fundamental and technicals of the shorter time frame.
The reasoning for our view is:
Eurozone risks are over-inflated and even in the case of a single country leaving the Euro, we don’t see the catastrophe which it is made out to be. Euro makes the cycles through Quarters and after touching through the bottom in Jan, it is in an uptrend. We are waiting to observe its behavior in first quarter ending and first period of second quarter which is April-may.
GBP is going to get the benefit of risk on environment and this year with Olympics can bring some good news for UK. This can give some good boost to UK.
EUR/CHF is a tricky pair, not because of any other fear but intervention risks and its impact on the traders. We think the peg of 1.2 will hold for EUR/CHF but we will keep a close watch on other markets like stock, M&A where Swiss industry might need the beneficial touch of a timely intervention.
Another big news worth keeping an eye on is Iran and how the issue plays out in next few months… this can be a game changer.
