Two major events in currency trading happened this weekend.
First, on Saturday, the ECB (European Central Bank) President Mario Draghi spoke in Washington at an IMF (International Monetary Fund) meeting.
This may not seem as important, however, this time Draghi was blunt. He said that “shorting the euro is pointless”. Such a direct point of view is rare from a central banker and this may indicate something big.
There is a precedent, however; a couple of years ago in a London press conference, Mr. Draghi said that the ECB will do “whatever it takes” to preserve the Euro. The EURUSD rate then started to soar from approximately 1.20 all the way to 1.40.
Will it be the same this time? I believe so, but with some reservations.
Such blunt statements are hardly ever made in main press conferences held by the ECB. Statements like this are more commonly heard at secondary press conferences when the markets are taking less notice. This is so that the impact on that instance is not as drastic. If Draghi would say these words at an ECB press conference, the Euro would climb immediately.
As of now, it hasn’t climbed since markets opened this Monday, and if anything, the Euro is moving lower. It may be Greek exit fears are the cause of this.
Secondly, China decided on Sunday to cut the reserves that banks are forced to withhold by 1%, basically unleashing around 1 trillion Chinese Yuan into the economy. This should be viewed as a major stimulus and the effect should be bullish for stocks and Asian pairs.
With that in mind, we watched Markets open on Monday, and exactly the opposite happened. The USDJPY even moved lower and even broke Friday’s lows.
The above two events show that trading is a difficult task. Binary Options are a great way to make quick profits and are less risky than Forex, but Forex can be more profitable.
I’ve noticed that 95% of traders will fail to make a profit with currency trading. The way you can ensure that you will succeed is to step out of the crowd in terms of your analytical thinking. Making a trading decision from one point of view is pointless. Make your trading decisions on a combination of technical and fundamental factors. Only then will you give yourself the best chance of making trading profits.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
