Wednesday, 29 September 2010

• What You Should Know About Greece, The Euro, And The EU

  Auto forex trading has been quite volatile lately as a result of the sovereign debt crises currently unfolding in Greece . Many fear that this crisis in Greece is going to spread to other EU countries that are deep in debt like Italy, Portugal, and Spain . As a result of what has happened , against the US Dollar the Euro currency has dropped about 11% . When looking at this situation we need to ask ourselves the following questions : Is the sell-off in the Euro over done and is the recent strength in the US Dollar a result of strong fundamentals in the United States or of weakness in the Euro ? The reason these are important questions is because the answer to the first question will be impacted by the answer to the second one .
  
  I believe that there is a benefit to the US dollar currently only because of the weakness of the Euro . Steam has only been picked up in the spending driven US economy because the Federal Reserve for some time has left the rates near 0%. What will occur when the Fed has to raise these rates? Will the US economy be able to withstand that kind of head-wind ? More than likely, no. Also, it is important to keep in mind that consumers are spending more right now because many consumers are simply walking away from other payments, such as mortgage, auto, and credit card payments. This leaves the consumer with extra income that they otherwise would not have so they're able to spend more on other items such as clothing, new electronic items, and meals out . Again consumers are going at it like crazy. It wasn't sustainable in the last Federal Reserve inflated boom and it will not be sustainable this time . The only options for the US Dollar in the next few years are default or inflation and both of the options will lead to disaster.
  
  When involved in auto forex trading the goal is to make some money. There is no bias . We only want to use our foresight for a profit . So the second question's answer is that the Euro is over sold and will hit a bottom at some point . 1.2300-2400 is probably where it will be . In reality, do you think Germany, the third largest economy in the world , will allow the currency to fail? The answer is, "probably not." This is the reason they aren't printing out more Euros and helping with a Greece bailout . The Euro will be a more sound currency because of what is happening in Greece . Investors will know that the Euro is safe because when there is trouble they will deal with a loss in the short term to preserve their health in the long term . So, Therefore, their economy may be having a tough time , but their monetary unit will be better for all of this . The opposite is true in the United States situation . Money is being printed to avoid short term problems , but this leads to problems with the health of our economy and the US Dollar.
  After looking at all that , we soon will be to a point where you will get a great bargain from the Euro that you should take advantage of in your own auto forex trading. Not only for the reasons we've talked about , but simply take a look at the market psychology. The professionals buy when there is a free fall and then the average person finds out about a crisis, comes in, and then tries to short the move that is already over. Already this pattern has happened over and over again, and this will continue to occur as long as human physiology includes limbic systems.

  David F Dacosta - Is a private trader using technical analysis to do auto forex trading & futures trading. David makes specific trade recommendations for a small select group of traders. He uses drummond geometry to make his forecasts. Click Here for training materials and a free forex trading forecast.

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