-------- Forwarded Message --------
Subject: EURUSD: Can A Hawkish FED Sent The EUR Towards Parity in 2016 ?
Date: Wed, 16 Mar 2016 21:11:16 +0530
From: Asis Ghosh <asis...@gmail.com>
Reply-To: asis...@gmail.com
Looking at the chart. consecutive closing below 1.09-1.07 zone, EURUSD
may fall towards 1.04-0.98 ( to fulfill Draghi's dream !!).
On the other side, only sustaining above 1.13, the pair can rally up to
1.18-1.25 (although this is possible technically, but in reality,
Draghi, the man behind the ECB's stance of "everything but the kitchen
sink" will simply not allow it, because the whole QQE policy is designed
for keeping EURUSD in the range of 1.15-1.05 or lower towards
parity-1.00 to stimulate EU exports/economy).
*Trading Idea: EURUSD*
CMP: 1.1074
Either sell below 1.10 or on rise around 1.11042-1.1220
TGT1: 1.0825-1.0715-1.05235-1.04 (1-3M)
TGT2: 1.00-0.98 (6-12M)
TSL> 1.1375-1.15
*Note*: Consecutive closing (3 days) above 1.1375-1.15 zone for any
reason, EURUSD may further rally up to 1.18-1.25 in the near to long term.
Today there is virtually no probability of FED rate hike and all
attention will on the language of FED statement
(hawkish/dovish/neutral), latest economic projection, Dot Plot forecast,
forward guidance/Q&A by Yellen.
In order to justify the FED's Dec'15 rate hike, Yellen may take some
hawkish stance amid improving job data, CPI but wage growth and consumer
sentiment may deter the FED with ultra hawkish script.
FED may indicate that barring some "unforeseen" circumstances (like
global/ China market turmoil in Jan-Feb), it may hike by 0.25% in
June'16, just before the forthcoming US presidential election time.
Traditionally, FED will be in the hibernation mood in election time and
after June, it may think of some action only in Dec'16, depending up on
the next Govt's economic policy (Trump seems like more hawkish and
Clinton on the dovish side). But, in reality, in US, such economic
policy matter is highly dependent on FED/ US Senate/Cong and there may
not be any big directional change, even if Trump wins.
FED basically may project only two hike (June/Dec'16) instead of four
hikes in earlier dot plots, which may be seen as slightly hawkish (USD
will gain strength for 1/2 hours/days and then come down).
On the other side, FED may choose not to experiment with the market
before the election time as ultimately the last hike in Dec'15 (after
nearly ten years) caused the global market turmoil in Jan-Feb'16
(although triggered by slump in Oil and China jitters/Yuan devaluation).
No Govt will like to face a presidential election with a market turmoil !!
Also, too much strong USD will not be good for US economy also and some
other economic data may be pointing towards a "mini/luxury-recession" in
US too !!
In the days ahead, apart from the above factors of Oil/Commodity and
China, Brexit may be a real threat for FED to take a "wait & watch"
stance rather than taking any real action (verbal intervention).
China/PBOC will also continue their mini/targeted stimulus frequently
and this may also increase the probability of more Yuan devaluation
apart from USD outflow fears and Chinese banks NPA/NPL/recapitalization
issues.
On the other side, ECB/BOJ are ready with "anything" to stimulate their
economy (QQE), but it seems that central bankers are increasingly "out
of ideas" for more unconventional economic policy and ultimately some
appropriate "structural reform" is required to stimulate the "real
street" rather than the "buy back" rally in "Wall Street" on the back of
"easy money".
Thus the divergent monetary policy between FED & ECB/BOJ/PBOC will make
the USD stronger wrt to almost all the G-6 currency and consequently
EURUSD may drift to near parity by the end of 2016 (1.07-1.04-0.98).
If Oil is stabilized between $30-40, the present inverse correlation
between EQ/Oil & safety of Yen may change and old inverse correlation of
USD & EQ (i.e. strong USD may be bad for EQ in the days ahead after a
temporary EQ rally).
*Analytical Charts:*
<https://1.bp.blogspot.com/-i7dwdCUIUfY/Vul5wpEsL0I/AAAAAAAAGgQ/DG11MGw-xHEDJujuh-7MmMj_7xqdGaKgA/s1600/EURUSD-16-03-2016.png>
<https://2.bp.blogspot.com/-wMIcvYRURkM/Vul508ApBzI/AAAAAAAAGgU/oEzxY4PEcf8jh3w3fawXPNomwmQ20rPTw/s1600/EURUSD-FIBB-16-03-2016.png>
<https://4.bp.blogspot.com/-i4NIgHRzDt4/Vul53PWILII/AAAAAAAAGgY/7GaD4VC15Q8FBsc1dm6xnZY-6zwr_Q_WA/s1600/EURUSD-WK-16-03-2016.png>
<https://3.bp.blogspot.com/-wZ8BrOnobRo/Vul57H-gFtI/AAAAAAAAGgc/I3A0_aGb-hY-G-keNeXEPbrWu19PHwEmw/s1600/EURUSD-PATTERN-16-03-3016.png>
<https://3.bp.blogspot.com/-PN0fJ7xxHWg/Vul58hDuvFI/AAAAAAAAGgg/ALSLrZwY0KErXBxF67GyqtFD6iXtj2xog/s1600/EURUSD-TL-16-03-2016.png>
<https://1.bp.blogspot.com/-z7uLk7Q59B8/Vul6AEcuUQI/AAAAAAAAGgk/wt9yfZ5ALrIvbar9Nx1xH_Xaaa36H0Aiw/s1600/EURUSD-TL-MT-16-03-2016.png>
--
Thanks & Regards,
Asis Ghosh
(asisghosh.blogspot.com)
NCFM-TA Certified
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