Yep, it would be highly ridiculous in any case to see the current strengthening in the face of almost universally negative fundamentals. We're not standing around a roulette table looking at random numbers. There are semi-understandable factors driving currency movements. Granted, I'm apparently not very good at figuring out what they are; or else short-term irrationality is running the show here for the time being.
Trade price and forget about what you think or what the media says. The market is composed of numerous entities that go beyond our understanding because we cannot possibly interview every party involved, and that' assuming their responses are honest. Stick to price above all and eliminate everything else from your analysis. Crazy A
In my own experiences with FX trading I've found they are some of the best markets to trade using TA/charts as they trend well. Dont bother trying to understand the fundamentals behind the moves, just find some good set ups that minimise the risk following the trend and enjoy the ride
You are assuming that a market price cannot be 'ridiculous' or get even more ridiculous or stay so for extended periods. If market prices never got ridiculous, there would be no scope for profit because they'd always be accurate. If market prices could never get more ridiculous, there'd be no risk in fading ridiculousness and so people would fade it way before it got to ridiculous levels. Therefore, ridiculous pricing is both necessary and desirable for profitable trading. You should love it, not hate it, if you are a trader.
Who says the Euro is strong? It might look it, but then again it might be weak, just that the $ is weaker.......
https://multimediafiles.kbcgroup.eu/ng/published/WP/PDF/marktenzaal_flash_ECB.pdf Look at the graph of the trade weighted euro on page 3, looks pretty neutral to me. Don't forget that Portugal represents only 1.x% of eurozone gdp too, it's just a media hype. Germany is booming, wage inflation is right round the corner and rates will begin to rise today. US 2yr yield circa 0.82% German 1.84% - where would you park your money... Having said that we may get a short term sell the hike trade today, lets see what Trichet says after it.
In the battle of trash currencies, the EUR has the upper hand over the USD at the moment. I guess the market thinks rate hikes > ZIRP + QE + "whatever else we can do to debase our currency."
This goes to the heart of the matter... let's assume for the sake of discussion that my fundamental analysis is absolutely 100% correct, and the Euro "should" be trading at 1.20. How on earth would knowing this do me any good? As everyone loves to repeat, "The market can stay irrational longer than you can stay solvent." Even if I'm right fundamentally, I have no basis to short EUR here, given that (as someone else mentioned) it could well go to 1.50 or 1.60 or whatever before dropping to its "correct" price, wiping me out in the meantime.