March 25, 2013 EUR/USD, EUR/JPY Analysis & Room Recap

Cyprus Ordeal

We expected in our Live Forex Room the events in Cyprus to come together as the  Russians seem to have the bad end of the stick in the new Cyprus bailout deal. The terms under discussion would assess a  tax  of 20 percent on deposits above 100,000 euros at the Bank of Cyprus, which has the largest number of savings accounts. Because the Bank of Cyprus suffered huge losses on bets that it took on Greek bonds, the government appears to be taking  depositors’ money to help plug the hole.

Another tax of 4 percent would be assessed on uninsured deposits at all other banks, including the 26 foreign banks that operate in Cyprus.

The question that surrounds the future of  Bank of Cyprus. If unsecured deposits at all Cypriot banks are taxed then large savings at Bank of Cyprus are likely to be taxed between 22 and 25 percent. If the levy is not imposed on deposits at other lenders, the haircut for Bank of Cyprus customers will be much larger.

For the Popular Bank of Cyprus, which is to go through a resolution process, the full bail in option could mean deposits above 100,000 euros being gone. Compensation for unsecured depositors will be shares in the bank that will be created by a possible merger between the Laiki and Bank of Cyprus.

I was not expecting a retest on the EUR/USD 1.3100 level as I felt the news was going to be sold. As a result I took some shorts on the Euro that netted a nice profits by the end of U.S. session.

Live Trading Room

We took several shorts on the Eur/Jpy. The first short was taken when the 123.00 cracked. This was a nice setup given the fact that our trend line  our trading pattern and our price strategy were all in line. The stop was tight with a wide target. We gathered +33 on this trade then took another trade below our support at 122.50.

Below is a chart of some basic analysis on the EUR/JPY pair.

Above you will see simple trend line break as the start of our trade at 123.00.

Here is an interesting video on Cyprus from Youtube

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