Foreign exchanging market world outlook on EUR/USD

The exchanging market world in the past week for EUR/USD closed at 1.4312. Loss more than 600 pips with all factors against it.

Some factors that affected the EUR/USD pair:

• Trichet's code words stating that hike won't be seen in June, but more likely in July.
• Greek crisis accelerated.
• Fall in commodities weakened Euro.
• German factory orders dropped by 4% instead of rising
• USD positive NFP results.
• "strong doller policy" in Washington part of bank consideration delay hikes.
• Manufacture in good condition above 60.
• Possible GDP growth.

More factors are going to be release in the coming week to define the direction of movement of the exchanging market. I personally believe that pair will remain bearish from the uprising negative reasons on Euro and the broken uptrend channel.

Some facts on euro worst fear to foreign exchange market

The ongoing depute of the Greek, Ireland, Portugal and Spain debt crisis is still yet to reach its conclusion. While focusing only on setting up enough funds to help Ireland, Portugal and Greek, their worst fear is getting nearer.  With Spain economy standing as the fourth biggest in the euro-zone, if it happens to be unable to retain its economy exposing to sovereign debts would be hard to solve.

The bursting of Spain property boom resulted in great lost to the economy. And here are some facts on the Spain economy. Over 20% of workforce is unemployment, deficit of 11.4% of GDP, total debt equal 240% of GDP, credit downgrade, 1.6 million unsold housing, carbon restriction forcing into green economy causing job lose and higher energy prices.

This uncertainties in the euro-zone will have a great effect to the euro in the foreign exchanging market.

Fibonacci usage

Foreign exchanging market consists of ups and downs in the prices and volumes in order to function as a market trade. There is no such thing as one sided direction move. In order to benefit from this equilibrium effect, we must choose the right moment to enter a trade. For example in a uptrend, why would you buy at a higher price when you can get it at a much lower price when it retrace. Fibonacci method is the most commonly used technique to calculate the possible extension and retracement of the trends in foreign exchanging market.

The Fibonacci important levels in retracement are 0.382, 0.500 and 0.618. For extension the important levels are 0.618, 1.000 and 1.618. (N%)

To calculate in uptrend:

Retracement = High - (High - Low) x N%

Extension = High + (High - Low) x N%

To calculate in downtrend:

Retracement = Low + (High - Low) x N%

Extension = Low - (High - Low) x N%

This method is a effective way of predicting the possible retracement and extension of the trend, but it might not always reach the calculated levels.