The "tug of war" has just been won with the British pound giving in to the stronger Swiss franc. Check out the chart below. Click on the image to enlarge it.
One battle that is yet to be decided is the one between the Euro and the Aussie dollar. Both have gone up and hit new highs against the dollar lately. Both EUR/USD and AUD/USD have gone up at about the same pace which has kept the EUR/AUD pair in an ever tightening range. Check it out below.
One thing is for sure, these break as the tug of war gets tighter and tighter. It won't be long before one of them "throws in the towel". When it does....there will be a sizable move as volatility increases in the direction of the new trend.
It would be my estimation that this should take place within days. However, the market will ultimately decide it. Just keep your eyes on these two pairs.
Pounds are already weakening against stronger Swiss fundamentals. GBP/JPY is also following its lead (downward) on yen strength as well.
So the low yielders are finally getting some more "revenge" on the "high yielders".
On the EUR/AUD pair, the technicals seem to indicate that the Euro will gain strength in the near term against the Aussie. However, in the long run, the Aussie has higher inflation and more buying from China which is keeping their labor market superior to that of Europe.
In my Money Trader service (www.money-trader.com), we just took profits from being long EUR/AUD. That was our final trade for the month.
So since mid October, all months have been profitable except for January which had a mild loss. November and December's gains were in the triple digits.
So we've really fared well. Check it out when you get a chance. I think you'll like it.
Sean Hyman
Editor/Trader
www.money-trader.com
Comments