2015 Buzz

It’s a new year in the west and the Internet is rained on by “2015 predictions” of all sorts. From tech, to movies and fashion trends, 2015 seems to mark a new era including a rise of misbehaving and unreliable heroines for upcoming books following the success of Gone Girl.

At Invest Diva we have our own set of predictions for 2015 which includes fancy trends on the forex dance floor.

BitCoin to Start a TV Campaign?

The new currency on the block is desperate for attention. And just as it has been proven over and over again that mass-media is freaking effective, BitPay (a bitcoin payment getaway) will be running ads on TV to raise public awareness of the “up and coming” alternative currency.

After-all, seeing is believing, eh?

Mr. Euro is Dripping

No that wasn’t a spelling mistake for “dropping”. The EUR/USD pair is dripping. Literally. If you take a look at the pair on the daily forex dance floor, you’ll notice that the pair may have remain under the influence of the New Year drunken parties and has been opening with a massive gap at the beginning of each trading day after New Year’s Eve- Just like drops of alcohol.

But will the downtrend continue? Currently the pair has successfully reached the low levels of 2010 and a break below this key support level at 1.1880 could open doors for even more drops… some analysts are predicting a 1.000 level.That’s one euro for one dollar! I guess it’s time to finally plan my trip to Europe. Shopping handbags in Italy will be fancy with such currency rates…. Or any other kind of investment in Europe for that matter because you know….What goes down must come up. So actually could be a good time to invest in the zone.

Analysts have debated in the press whether any government bond buying by the ECB will significantly increase liquidity and stability, arguing that five year bonds – the likely target of ECB QE – are already trading at all-time lows and pushing them down further is an irrelevance. The ECB go into a non-policy meeting tomorrow and will likely discuss alternatives to buying government debt, which are said to include allowing national central banks to buy their own country’s bonds, but at their own risk – this would allay Germany’s fears of accruing bad debts of others, but would also risk the austerity train, that they are set on riding, de-railing as peripheral countries over indulge in a possible economic fix.

Another Positive Year for US Dollar

Lastly lets brief on Ms. USA. In 2014, Ms. USA (aka US dollar) got so powerful that she single handedly took down most of her major dancing partners on the forex dance floor; but it didn’t end there. She continued on to other markets such as commodities as well. This was all sparked by a strengthening U.S. economy, the End of the Federal Reserve’s bond purchasing program, and Fed rate hike speculation speculation of a Fed rate hike in 2015.

The trend of the U.S. economy posting up improving economic numbers (falling unemployment rate, rising GDP numbers) is likely to continue with the surprise drop in energy prices providing a boost to the consumer economy, but with inflation still low it’s also likely that IF we see a rate hike, it’ll be a very, very slow move by the Fed. Unless we see a shock in 2015, Ms. USA still looks like the chick with the good moves on the dance floor. So the probability is good that the USD is likely to have another positive year against most of the major currencies.

Oil Prices Could Continue to Slide

Oil broke the $50 handle yesterday for the first time in almost six years, and it might continue sliding in the coming months.

The move lower pushed aviation and transport stocks higher, though it did, once again, hit producers and refiners.

The US is considering using such low energy prices as an opportunity to raise gasoline tax. Prices per gallon are now around the $2 mark and a few extra cents on that could well fund large infrastructure projects and further boost the economy. The White House has chosen not to comment on the proposals, but apparently still believes that closing tax loopholes is the best way to fund such projects – which is possibly the case, but we’re pretty sure that a fuel tax rise would be the quicker, simpler route.

The price of oil was the main catalyst for Wall Street’s poor performance yesterday. with the S&P and Dow Jones close to 2% losses on the day. The S&P is now just 1% away from the all important 2,000 level. America’s stock market performance spilled into Asia, with the Nikkei suffering its worst single day in ten months and the Australian stock market having a tough time of it too.

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Intraday Forex Technical Levels

EUR/USD 4-hour: 1.1875 is the key support level.

Invest Diva positioning: Short positions below 1.1875 with targets at 1.1782 and 1.1663 in extension.

Technical reasons why: The pair is still testing the key support level at 1.1875 below the Ichimoku’s cloud. A break below the support level could signal even further downtrend. The RSI is moving below the oversold zone.

Alternative Scenario: Above 1.1875 look for further upside toward 1.9700 and 1.2056.