Euro Versus Kiwi and Yen August 19th

FX Strategy Video > Currency Pairs Analysis

EUR/NZD rose on Thursday as fear crept back into the markets. The global sell off was swift and brutal on Thursday, and we saw many of the European indices shed over 5%. The pair shows how the world feels about risk, with the NZD gaining, or this pair falling, when traders feel better about taking risk in the markets. With the 1.75 area approaching, we feel that this pair should be watched for any signs of weakness on Friday - perhaps in the form of a shooting star or long red candle. If we get that, we won't hesitate to sell this pair. If we close above this level on the daily chart, we could see 1.80 for it is all said and done.

The EUR/JPY pair fell on Thursday, but the Bank of Japan is sitting below and waiting for the markets to make a move. Because of this, the fall was a little more muted than one would have expected during a massive sell off like we had on Thursday. We think this pair can be shorted - as the Bank of Japan doesn't worry so much about it, but if you choose to do this - you MUST keep an eye on USD/JPY. If it fall s too fast, the BoJ will get involved. If they do that, the Yen will get sold off against the major currencies. It is a dangerous cross to play at the moment, but watching it can give you a great barometer of the world's risk appetite. If we get a supportive candle at the close on Friday - we will not hesitate to buy as well. 110 is a MASSIVE area that should be watched. Depending on the Friday close, we could get a longer-term signal.

Published on 18th of August 2011
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