Professional Documents
Culture Documents
UPDATE
Technical Fundamental
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Disclaimer
1.6017 High
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1.4941 High 0.0%
13841 38.2%
50.0%
61.8%
100.0%
1.63 1.62 1.61 1.60 1.59 1.58 1.57 1.56 1.55 1.54 1.53 1.52 1.51 1.50 1.49 1.48 1.47 1.46 1.45 1.44 1.43 1.42 1.41 1.40 1.39 1.38 1.37 1.36 1.35 1.34 1.33 1.32 1.31 1.30 1.29 1.28 1.27 1.26 1.25 1.24 1.23 1.22 1.21 1.20 1.19 1.18 1.17 1.16 N D
WEEKLY CHART
The markets breakdown through the twin diagonal supports at 1.40 or so remain in place. The second critical point of reference is the low at 1.3841. And the Fibonacci support at 1.3780 A second close below that band 1.3780-1.3841 on the week would be a powerful affirmation of the bear case.
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2008 M A M J J A
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D 2009 M A M J J A
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N D 2010 M A M J
A S O N D 2011
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Euro - U S D ollar
DAILY CHART
The sharp rally from the recent low has concentrated the minds of the bears. We note the resistance at 1.3841, so far powerful, and the Fibonacci resistance at 1.39. Short-term bulls will want the market to close above that band to sustain their optimism For the moment 1.3841-1.39 looks to be strong short-term resistance .
1.4576 High
1.465 1.460 1.455 1.450 1.445 1.440 1.435 1.430 1.425 1.420 1.415 1.410 1.405 1.400 1.395
38.2% 1.3841 Low
Disclaimer
4 April
11
18
25
2 May
16
23
30
6 June
13
20
27
4 July
11
18
25
1 8 August
15
22
29
5 12 September
19
26
3 October
FUNDAMENTALS:
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After a prolonged period of range trading, Dollar/Euro finally broke out (9 th September) with the Dollar strengthening decisively. But before we explore why the range finally gave way, a reminder of why the range held for so long might be useful. The Dollar was constrained by several factors: 1. The slowing economy, despite the Feds QE2, 2. A growing fear the economy might slip back into recession, 3. A budget deficit and debt build up that was considered negative for the US economys long term heath, and 4. The political stand off between the President and House Republican over raising the Debt ceiling, since resolved. But equally, the Euro was hobbled too: 1. The long running Sovereign debt crisis, still unresolved, 2. Fear a peripheral state; Greece, could default, and 3. Fear of contagion. And was supported by the ECBs interest rate hiking cycle. Result stalemate and the long-held range. So where are we now? In the US, the economy remains weak and a recession may result. The Fed looks set to deliver QE3 at some point in the near future, and although an agreement was reached to hike the debt ceiling and reduce the budget deficit, the deficit cut fell short of expectations. However, the problems are known and quantifiable.
FUNDAMENTALS: CONTINUED
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In the Euro zone, despite Ireland, Portugal and Greece being bailed out via the Euro zone rescue fund, the Sovereign debt crisis rolls on. Indeed, Greece might yet default and leave the Euro zone. Additionally Spain, Italy and even France have fallen prey to markets fearful that their debt burden is too great and needs reducing. But after 1 years political leaders still seem unable to come up with a credible solution. Now the focus has widened to take in the Euro banking system which many believe is on the brink of a new financial crisis. Moreover, the Euro zone economy is starting to feel the stress and strain and data has turned mixed, leading to fears of a fresh Euro zone recession. The ECB has responded by halting its rate hiking policy. And it was this act that allowed the Dollar to make sharp gains against the Euro. But what really helped the Dollar and weighed on the Euro was Starks resignation from the ECB over policy differences. Over the last five days the Euro has steadied and recovered some of its losses. But this is due to the major Central Banks pumping large amounts of Dollar liquidity into the markets to aide the Euro zone Banks and others that are funding it increasingly difficult to get Dollar funding. Dont be fooled, traders will not respond so positively to liquidity provision for ever, the core issues will move back to centre stage and the Euro will weaken further, and remain weak until the Sovereign debt crisis is resolved.
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