By Greg Holden
As is typical around holiday trading sessions, investors appear overly cautious as thin trading and an absence of market-guiding data releases leave the forex market exposed to wide swings. Most analysts appear to be advising caution on their clientele as tight ranges on the major currencies are to be expected.
This environment, however, has the possibility of creating false impressions for inexperienced traders. The market is calm today. The problem is that it shouldn’t be. Given the news, data releases and comments flying about this past week, the major currencies should be on edge, vying with one another in a volatile market. Instead we have calm.
All we can do at this point is try to get a feel where most investments will be coming in at the start of next week. Given the cautious environment on Friday, it may not make much sense to be actively trading with quick ins and outs. But longer-term investors may find this market a stable environment to assess their portfolios and adjust their positions ahead of Monday’s return to full-bore trading.
Given what we’ve seen over the past several days it seems safe to say the EUR/USD, GBP/USD and USD/JPY are set to continue their dominant trends at the start of next week. The EUR is a top performer lately and fundamentals, technical data, and market tone appear to be favoring its continued rise, as pointed out in an earlier article.
The deceptive rise of the US dollar in today’s trading is likely due to the last gasps of traders pushing down on the euro after ECB President Trichet’s comments the other day. As the market returns full volume next Monday, traders who cautiously left themselves in the safety of the USD appear poised to shift directions and flood back into higher yielding assets.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
