Why did the EUR/USD fall hard last week?

While the newspapers are full of explanations for why the euro fell last week, traders need only look to the charts, says John C Burford.

Conventional analysis will tell you that the European Central Bank (ECB) rate cut, the US GDP number on Thursday and the jobs data on Friday surprised' the market and lifted the dollar.

Of course, you can read much more detailed and involved commentary around this theme, but that will be the basic explanation' for the sharp fall in the euro.

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(Contracts of EUR 125,000)Row 0 - Cell 1 Row 0 - Cell 2 Row 0 - Cell 3 Open interest: 252,554
Commitments
103,33370,1906,97593,269124,922203,577202,08748,97750,467
Changes from 10/29/13 (Change in open interest: -30,369)
-32,7214,7531,1675,807-31,418-25,747-25,498-4,622-4,871
Percent of open in terest for each category of traders
40.927.82.836.949.580.680.019.420.0
Number of traders in each category (Total traders: 186)
4462245154109126Row 8 - Cell 7 Row 8 - Cell 8

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.