EUR/USD: Don't chase the car, Snoopy! This is a relief rally.Hello all.
Apologies if my "dog chasing a car" expression does not resonate with everyone. However, I think we can all use a little levity once in a while.
I entered into a long EUR/USD position last week although it was a gamble what with the German election this weekend.
However, I have a very tight trailing stop on this trade. It definitely has the legs to reach 1.0530-40. Higher than that, we'll see.
Allow me to explain my point of view.
Investors, especially institutions, like certainty. The German election is over and with that some certainty that there is the will to form a coalition government ASAP.
It is not my place to criticize the German people's choice but it seems that the immigration haters like the AdF party, DJT and Musk, who did not hesitate to support them, did not win the day. There is however a steep road ahead until a formal government is in place.
Germany's economy has been in decline and the ECB rate decisions have reflected that.
The Ukraine/Russia war seems to be the EUR/USD driver now that Trump and his mouthpiece, Hegseth, have essentially showed that they do not care about Europe's future,
OR FOR THAT MATTER THE INTERNATIONAL ORDER AND THE USA'S ROLE IN IT AS A PEACEKEEPER.
More alarming is the claim that Ukraine started the war. DJT is still cozying up to Putin and nobody except him knows why.
This cavalier approach by the Trump administration has raised the specter of European powers having to produce their own weapons and also leaning on the UK to assist. This may boost economic output but I would not invest in that prospect for now.
What the planet needs is an end to this war and the USA to show some real leadership.
Now is also the time for the USA, Euro Zone and Japan to start urging China and India to assist in stopping this insanity started by Putin. The UN needs to step up to the plate too.
If Trump really wants monetary compensation for aiding Ukraine, then let it be so. He can start by insisting on a slice of the reported USD280 billion in frozen Russian assets. And if it does come to Ukraine having to give some mineral rights to the USA in return for a peace keeping force and repayment for military aid, well, fine by me as a tax payer one way or another. There is however not a snow ball's chance in hell that the USA congress will approve what will be seen by Putin as an act of war against Russia.
HERE IS A THOUGHT: what if DJT wakes up tomorrow morning and start using his bully pulpit to promote all nations to get along instead of barking about tariffs and other not so important issues like the weak stream of water from his shower. Just kidding, of course, but one may dream...
I have just booked profit on my long position and will monitor it for another position, long or short. Chasing it in the hope of reaching 1.0600? Of course. That is what we do as traders. But keep the risk small.
Best of luck all.