The week started off with all markets in red and the Down Jones breaking the 10000 level for the first time since October 2004.
What was observed yesterday went beyond reason and normal behavior, and many traders around the globe were left shaken and confused by the markets actions. This surprised move was due to a fresh and renewed fear in the market regarding the world´s economy as news came out the $700 billion plan was not going to be enough to fund all banks, and more money will soon be needed. The FED moved towards providing another $400 billion, looking desperate. Desperate times call for desperate moves!
EUR/USD broke support level 1.35 and printed a new lot at 1.3440. The pair traded above 1.35 with a highest level of 1.3620. The move was not enough and the pair dropped 100 points.
The question rises as traders ask themselves, why is the dollar showing so strong with US economy going into such a tremendous crisis? Let´s take a step back to previous recessions. The dollar always remained strong in order to help the trade deficit. With the current rescue plan, this deficit will only be wider. U.S. Elections are another fact to watch out for.
EUR/USD is evidently a downtrend as long as it keeps trading below 1.3660 only further losses will come. Is the pair breaks 1.34, net level of importance is 1.3360.
Times are clearly difficult right now, so staying aside and wait before taking any radical decisions seems like the right thing to do.
