Daily Market Update: Has the Euro Overshot?

ABOUT THE AUTHOR: John Putman II is a full-time trader and managing member at FX Analytics Analytics Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision making. In the trading space, analytics are applied in a predictive manner in an attempt to more accurately forecast the price. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analyt Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision making. In the trading space, analytics are applied in a predictive manner in an attempt to more accurately forecast the price. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analyt Read this Term, a third-party research provider focused on Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term rate modeling, economic complexity, genetic programming and distributive computing.

Many institutional investors were targeting a EUR/USD of 1.20 between Q4 2014 and Q1 2015 with a grind towards near parity by the end of the year, based on current fundamentals and continued pressure from the SNB decision.

The pair currently trades at 1.13124, which is well below initial targets for the quarter and may reflect a bandwagon effect. If the pair has indeed pushed out of its equilibrium range, there may be a regression opportunity here for a pullback to 1.18. Long-term traders will likely get short again at those levels, or even below that, so hanging on for higher isn't advised.

In my Euro Index I’m looking at a potential reversal in the 14 day trend. I can’t definitively call this a short-term bottom but I am interested in seeing how this plays out. With so much expectation for a continued decline, the real risk this year is to the upside. A stronger European economy or a weaker US Economy in 2015 could result in a sharp correction.

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