• 14 hours TikTok Takes Center Stage In US-China Tech War
  • 22 hours Are Semiconductor Stocks Overvalued?
  • 2 days Jobs Report Doesn’t Say Much Amid COVID Uncertainty
  • 2 days Crypto FOMO Heats Up As Bitcoin Climbs Above $11,000
  • 3 days Aluminum Is Bouncing Back In China
  • 3 days The Deep-Sea Mining Debate
  • 4 days Markets Trending Down Despite Tech Blow-Out
  • 4 days Big Oil Battered On Dismal Earnings
  • 5 days Russian Billionaire Bails On Mid-Sized Gold Miner
  • 5 days Gold Stocks Gear Up For A Big Autumn
  • 6 days America Is Looking To Bring Nuclear Power To Space
  • 6 days What Is Behind Gold's Astonishing Rally?
  • 7 days Stocks Tumble On Brutal Economic Report
  • 7 days Kodak Soars By 400% After Trump Bump
  • 8 days U.S. Coal Production Falls To 42 Year Lows
  • 8 days Indonesia Moves To Bolster Mining Sector
  • 9 days The U.S. Dollar Is Losing Ground As A Reserve Currency
  • 9 days Gold Prices Soar To Record Highs As Dollar Dips
  • 10 days Republicans Unveil Stimulus 2.0
  • 10 days Big Oil Is Back On The M&A Game
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Vadim Pokhlebkin

Vadim Pokhlebkin

Vadim Pokhlebkin joined Robert Prechter's Elliott Wave International in 1998. A Moscow, Russia, native, Vadim has a Bachelor's in Business from Bryan College, where he…

Contact Author

  1. Home
  2. Markets
  3. Other

EUR/USD: What Moves You?

It's not the news that creates forex market trends -- it's how traders interpret the news.

Today, the EUR/USD stands well below its November peak of $1.51. Find out what Elliott wave patterns are suggesting for the trend ahead now -- FREE. You can access EWI's intraday and end-of-day Forex forecasts right now through next Wednesday, February 10. This unique free opportunity only lasts a short time, so don't delay! Learn more about EWIs FreeWeek here.

What moves currency markets? "The news" is how most forex traders would undoubtedly answer. Economic, political, you name it -- events around the world are almost universally believed to shape trends in currencies.

A January 14 news story, for example, was high up on the roster of events that supposedly have a major impact on the euro-dollar exchange rate. That morning, the European Central Bank announced it was leaving the "interest rate unchanged at the record low of 1% for an eighth successive month." (FT.com)

The euro fell against the U.S. dollar after the news. But could it have rallied instead? You bet. In fact, traditional forex analysis says it should have. Here's why.

Analysts always say that the higher a country's interest rates, the more attractive its assets are to foreign investors -- and, in turn, the stronger its currency. Well, U.S. interest rates are now at 0-.25% and in Europe, at 1%, they are 3 to 4 times higher. Isn't that wildly bullish for the EUR? Apparently not, and wait till you hear why -- because in today's announcement ECB president Jean-Claude Trichet warned that European recovery would be "bumpy." Ha!

By no means is this the first time a supposedly bullish event failed to lift the market. On June 6, 2007, for example, the ECB raised interest rates. Bullish, right? But the euro didn't gain that day, either -- the U.S. dollar did.

Watch forex markets with these "inconsistencies" in mind and you'll see them often. In time you realize that it's not news that creates market trends -- it's how traders interpret the news. That's a subtle -- but hugely important --- distinction.

So the real question becomes: What determines how traders interpret the news? The Elliott Wave Principle answers that question head-on: social mood -- i.e., how they collectively feel. Currency traders in a bullish mood disregard bad news and buy, leaving it to analysts to "explain" why. Bearishly-biased traders find "reasons" to sell even after the rosiest of economic reports.

If you know traders' bias, you know the trend. How do you know? Watch Elliott wave patterns in forex charts - it's reflected in there, on all time frames.

Today, the EUR/USD stands well below its November peak of $1.51. Find out what Elliott wave patterns are suggesting for the trend ahead now -- FREE. You can access EWI's intraday and end-of-day Forex forecasts right now through next Wednesday, February 10. This unique free opportunity only lasts a short time, so don't delay! Learn more about EWIs FreeWeek here.

 

Back to homepage

Leave a comment

Leave a comment