EUR/USD Daily Outlook - Mar. 28, 2013

Christopher Lewis

The EUR/USD pair fell rather significantly during the session on Wednesday, as you can see by the chart. The 1.2850 level that had been thought of as support got busted relatively easily, and we even tested the 1.2750 level by the end of the day. This of course is predicated upon the concerns of all things related the Cyprus, and the potential bank runs that we are about see during the next day or two.

The biggest concern is whether or not there are other Europeans pulling their money out of those banks. It's very likely that there are people in places like Spain in Italy you were becoming very concerned about their own deposits, as we could see bank blowups in those countries as well. It was once thought that depositors would not be taught, but the deal in Cyprus has changed everything. We now know that the "genie has been let out of the bottle", and as a result depositors are no longer sacred cows on the continent.

Going forward, there's going to be a lot of mistrust of European banks, and this has shown itself in the stock market. French, German, and peripheral banks alike got absolutely pounded on indices around the world. This also makes sense for a bit of an exodus of capital out of Europe as fears continue.

American Deposits Are Secure

One of the biggest things that stick out in my mind is the fact that during the financial meltdown a few years ago, there were no American deposits that were her. In fact, the Americans went so far out of their way to make sure deposits were secured that the populace didn't even think about making a run on the bank. Bailing out the large banks wasn't the concern of the depositors, and was of course taken care of in other ways.

Because of that, it's easy to see where there would be more confidence in the United States than Europe right now. I believe that money will still flow from left to right as far as the Atlantic Ocean is concerned, and as a result we will continue to see weakness in the Euro. However, I think that a bounce is probably coming, so I am going to be selling rallies as soon as a show signs of weakness.

EUR/USD FX Analysis - March 28, 2013

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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