Tuesday August 14, 2018 - 18:32:53 GMT
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Forex: Why Currencies Such as the EURUSD Fell as the USDTRY Corrected
I have been asked why the dollar firmed today when it was supposed to be a safe haven after selling pressure eased on the USDTRY, which fell sharply on Tuesday. I was also asked why the EURUSD fell sharply to a new 2018 low as it had been under selling pressure over concern over fallout from the Turkish crisis on European banks and should have benefited by the drop in USDTRY.
The price action suggests that currencies such as the EUR, JPY, etc. were being used to hedge against weakness in the TRY. So unwinding of short TRY positions saw offset selling vs. other currencies used as hedges. So far this is just a correction but turned into a lose-lose for currencies such as the EURUSD.
It was also consistent with our High-Low strategy that we use with the Amazing Trader that showed a vulnerable downside in currencies such as the EURUSD and GBPUSD as well. This is a strategy you can get access to by signing up for the Amazing Trader.
Looking ahead, EURUSD has entered a key zone with just 1.1311 standing in the way of a void until next key Amazing Trader support at 1.1111? On the upside, the Amazing Trader shows a move back above 1.1365 would be needed to slow the risk but only back above 1.1418 and 1.1433 would negate it.
Jay Meisler, co-founder
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