On Friday EUR/USD hit a 20-year low, that's a big big deal, but to every effect in the market the is a cause behind it and if we are to succeed as traders and/or investors we need to understand why markets move because knowing the cause can help us take advantage of the effects!
ONE BIG REASON FOR THE CRASH:
Eurozone's trade surpluses have been completely wiped out because of energy crisis Europe is facing from their failed actions against Russia.
Germany has slipped into trade deficit for 1st time in 31yrs, shortfalls in trade were also observed in France & other EU countries and all of this is taking a big toll on the eurozone currency.
Major banks currently predict that we are heading for parity on EURUSD and there is little hope this will change because there is no "quick fix" for the problems in Europe, it actually seems that things will get much worse before they get better.
A confluence of factors are adding to further downside risk, here are a few key factors to take away with you from this post:
- Inflation (CPI data) is getting out of hand not only in Europe, but the USA too, Poland's CPI data is expected at 15% for example.
- The protests we are seeing in Holland are also taking a toll on the Eurozone
- The UK faces strikes in transportation
- There are big problems in EU airports
- The Biden administration is considering to lower the
Chinese trade tariffs as such would be a drag on the measured headline CPI (that includes taxes)
- The German trade balance is now negative
I can add much more to this list but as you can clearly see... it is all doom and gloom for now, and that means OPPORTUNITY to us traders as the markets are bound to create bigger moves, whether up or down that is for the market to decide... our job is to simply focus on following the market and obeying it!
Hope this post has helped you in one way or another!
Good luck trading!
-
ONE BIG REASON FOR THE CRASH:
Eurozone's trade surpluses have been completely wiped out because of energy crisis Europe is facing from their failed actions against Russia.
Germany has slipped into trade deficit for 1st time in 31yrs, shortfalls in trade were also observed in France & other EU countries and all of this is taking a big toll on the eurozone currency.
Major banks currently predict that we are heading for parity on EURUSD and there is little hope this will change because there is no "quick fix" for the problems in Europe, it actually seems that things will get much worse before they get better.
A confluence of factors are adding to further downside risk, here are a few key factors to take away with you from this post:
- Inflation (CPI data) is getting out of hand not only in Europe, but the USA too, Poland's CPI data is expected at 15% for example.
- The protests we are seeing in Holland are also taking a toll on the Eurozone
- The UK faces strikes in transportation
- There are big problems in EU airports
- The Biden administration is considering to lower the
Chinese trade tariffs as such would be a drag on the measured headline CPI (that includes taxes)
- The German trade balance is now negative
I can add much more to this list but as you can clearly see... it is all doom and gloom for now, and that means OPPORTUNITY to us traders as the markets are bound to create bigger moves, whether up or down that is for the market to decide... our job is to simply focus on following the market and obeying it!
Hope this post has helped you in one way or another!
Good luck trading!
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