TalkFNStocks, Options and FOREX investments

The Euro has been around for only over a decade now and there are already questions as to whether the currency is going to survive or not. The Euro reached a double peak around April – July 2008 and has been on a downward trajectory after that. It is currently trading at around 1.34 to the US Dollar and has a strong support at around 1.30. If it goes below 1.30, then it can go all the way down to 1.20.

We are still not making long term forecasts for the Euro yet. Although the challenges faced by the Euro are quite huge with the biggest problem being the economies of the so called second-tier Euro nations. Germany is undoubtedly the “first among equals” and there is every indication that the Germans will tolerate lesser equals only for so long. On hindsight. the Europeans (especially Germany and France) are realizing that the theory of a single currency is much better than the actual practicality of it.

But the US situation is also not strong. And one has to always remember that the strength of a currency is never measured as a standalone item. It is always measured against another currency. Thus, it will turn out to be a case of who can handle the situation better – the US or the entire Euro zone. In the near term we are banking on the Euro falling further at least below the 1.30 mark. Beyond that, we will have to wait and see how things shape up.

This usually makes me nervous. What I expected to happen with my CAD/JPY FOREX currency pair in a week or so has happened within 2 days. My CAD/JPY FOREX trade from December 2 has already delivered over 250 pips of gain. This is of course not surprising given the strength of the Canadian economy and the corresponding weakness in the Japanese economy.

I am going to keep track of what is happening and what is next for Canada, but for the time being, I am going to take my gains and be happy. My buy price of the CAD/JPY FOREX currency pair trade was 83.063 and I sold this morning at 85.702 giving me a gain of 263.9 pips. That is the highest FOREX gain since I started tracking my trades in this log.

Interestingly, during these 2 days, the USD/CAD FOREX currency pair as actually gained only a few pips. That shows how important it is to not only be sure about which currency will go up but also which one will go down (strength and weakness) against it. While the US economy has been weak, it is not as weak as the Japanese.

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I am looking at the charts for the EUR/USD FOREX pair and notice that the EUR (Euro) has broken some resistance levels against the USD (US Dollar). Within the last 4 hours or so (between 11:00 AM ET to around 3:00 PM ET) it has gone up from around 1.505 to over 1.514 which is about 90 pips on the FOREX trade.

But more significantly, it has broken through some major resistance levels that it had not been able to break earlier. It has also touched a 13-month high which means that the USD is at its lowest against the EUR over the last year. It is consolidating a little around the 1.5135 level. The next resistance levels are at 1.515 and 1.5185.

If it breaks 1.515, I will be getting in with a long position. I have not had good luck in EUR/USD FOREX trading recently, but am willing to forget that and move on.