ForexSpirit

The first half of April has seen a continuation in the rise of the euro. It has broken the high against the US dollar at 1.3478 from March 2005 and is looking to tackle the all-time high of 1.3665 seen in December 2004. The euro also broke above the 160 handle against the yen and is now trading in clear blue sky territory.

I placed three trades during this period and profited from all three. Since I am currently in the top half of my median grid the leverage used for these trades was either 2:1 for Q3 entries or 1:1 for a Q4 entry.

The euro has broken out slightly above the top of my median grid at 1.3500. The breakout move is not totally convincing yet, with a return into the grid yesterday on some US dollar strength in spite of a weak US consumer confidence number and an unchanged core PPI reading.

I think a half grid move up might be on the cards next week, as it is looking unlikely that the dollar will have enough strength to pull back more than 200 or 300 pips at this stage, given the Fed’s wait and see outlook and the continuing slow unravelling of the subprime mortgage market.

With the ECB still on the ball to raise interest rates in June and good European economic numbers still being released, it is probably fair to say that the all-time high of 1.3665 will be at least tested before we see any major correction in the current trend.

In the short term I think the US dollar will make a slight comeback over the next week or two. Euro bulliness is almost at feverpitch now, and this would seem to be as good a time as any for the big boys to yank the carpet out from under the small players. In turn, the big boys enable themselves to profit from the recent euro bulliness, while also allowing them to form new base positions 100-200 pips below the current price in line for a move up to test that all-time high.