EURO/USD Eyes Cat and Mouse Game by US Fed and the ECB

Name: Michael Radkay Company: RDS Trader

Years Trading: 18 Favorite Movie: Raging Bull

With market participants still looking for further US rate cuts and witnessing a sidelined ECB, the $EURO continues to flex its muscle against the Greenback. Fed Chairman Bernanke is trying to head off potential recession with the credit debacle mortgage houses have applied to the US Economy. This mind-set has caught fire as the US Fed Fund futures players have priced in nearly 75 basis points of further US cuts out to May-08. The ECB on the other hand is not so certain rate cuts are the remedy.  President Jean-Claude Trichet fears rate cuts at this time will apply unwanted inflationary pressures on the European economic system, which continues to fuel a bid in the $EURO.

Data is now hinting the housing crunch is not only a US problem but a potential global disease. Housing prices in Europe are showing some signs of a slide, which is beginning to raise an eye-brow to the ECB’s sidelined position. If slowdown gets cast into the fire and Trichet and company remain idle, EURO/USD will see a definitive shift in bullish attitude. Market participants will begin to view the US Fed as ahead of the curve and the leader to stave off a global meltdown. This scenario will give the US dollar a bit of a spark that it desperately needs.

If Europe begins to catch the US cold and the ECB remains passive, we will surely get fuel to re-test the 2008 low set near 14300.  Trichet’s hand will be dealt and traders will view him as late to the party. Technically EURO/USD bears will need to see closing prices below the current key support level set at 14600-14650. At this time Traders continue to ride the Euro bull as they feel the US Fed has contained the problem with their latest round of rate cut medicine.  Status quo and mid-summer US recovery will keep the bull-trend intact as prices look to attack the all-time highs set near 15000 enjoyed late in 2007.

Nov. 1, 2007 - Feb. 21, 2008
EUR/USD Daily

 

About the Author

Michael Radkay (NFA Broker/Commodity Trading Adviser #02500761) mentors and prepares electronic traders. After receiving his BA in Economics from Lake Forest College in May of 1989, Mike has since then dedicated the last 18 years of his life to the futures industry.

The depth of his experience and skills as a futures trader, broker, coach and CBOT member dates back to 1993. The level of students that he has taught range from novice to professional. His knowledge is vast as he has traded through 3 presidential changes, 2 fed chairmen raising and cutting the fed funds rate to the extremes, the gulf war, 9/11, and the current Afghanistan / Iraq war.

Today he is trading through the current housing collapse and credit crunch. Students are thoroughly trained from this knowledge base and can access Mike’s daily analysis during the sessions. The materials consist of the comprehensive RDS Home-Study Guide (Learning the Game), RDS Daily Service (Pre-Game Routine) and RDS Interact (Game-Day Adjustments) that were specifically developed with the needs of a trader in mind. These tools will complement what you have learned during the coaching sessions.

E-Mail: mradkay@rdstrader.com / Website: www.rdstrader.com