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Investors Prefer Risk, Keeping EUR/USD Going Higher

February 1, 2011 (Last updated on February 2, 2011) by Vladimir Vyun

EUR/USD continues its rally as investors still favor riskier assets despite troubles in Egypt. The dollar attempt to advance after the report showed that US manufacturing continues to expand, but the rise was short-lived partly, perhaps, as construction spending dropped significantly instead of rising, as was predicted. EUR/USD trades near 1.3763.

ISM PMI rose to 60.8% in January as an rconomic activity in the manufacturing sector expanded in January for the 18th consecutive month. Analysts predicted a growth to only 57.8% from December reading of 58.5%. (Event A on the chart.)

Construction spending, on the other hand, was considerably worse than was predicted, falling 2.5% from November to December and frustrating economists, who predicted an increase by 0.1%. The previous month’s reading was revised from an increase by 0.4% to a decline by 0.2%. (Event A on the chart.)

EUR/USD for 2011-02-01

If you have any comments on the recent EUR/USD action, please, reply using the form below.

3 Responses to “Investors Prefer Risk, Keeping EUR/USD Going Higher”

  1. maya

    is eurusd going higher coz i have 3 positions r opened with400 $ lose what shall i do

    Reply

    admin Reply:

    If I was you, I’d close those positions ASAP.

    Reply

  2. Udi Sela - SuperDerivatives

    EUR/USD – the disappointing Non-farm payrolls of last week (actual 36,000 vs. 140,000 expected) has put some pressure on the Euro. However, the Euro seems to have established a base at low 1.35 levels.

    It has been interesting to follow the impact of the recent events in Egypt on the Forward curves of related currency pairs (such as USD/AED, USD/SAR and USD/EGP). As you would expect, the Curve (typically the one year curve) has moved to the upside. The last couple of days, we have noticed a correction although the curves haven’t reverted to pre-crisis level.

    Reply

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