the euro's vulnerablility resurfaces ig

8/2/2019 The Euro's Vulnerablility Resurfaces Ig

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Authorised and regulatedby the FSADisclaimer

UPDATE

FundamentalTechnical

in association with

4th April 2012

The Euros

vulnerability re-surfaces


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UPDATE

Fundamental

Technical

in association with

Disclaimer

The Euros vulnerability re-surfaces

WEEKLY CHART

The market has failed to rally backabove and stay above the necklineresistance of the large bear Head andShoulders Note too the combined resistancefrom the falling diagonal that hashelped to repel the bulls.

So the big bear H&S Top remainsintact.

The minimum move needless to say,is down a long way..

DAILY CHARTThe triple failure of the market tore-penetrate the neckline isrevealing

The possible H&S reversal isunmistakable.

Note first though the test of therising diagonal

If that breaks the test of thehorizontal 1.3006 will also be themoment of truth for the bears.

WATCH 1.3006!

Jun Jul Aug Sep O ct Nov Dec 2011 Mar A pr May Jun Jul Aug Sep O ct Nov Dec 2012 Mar Apr May Jun

1.17

1.18

1.19

1.20

1.21

1.22

1.23

1.24

1.25

1.26

1.27

1.28

1.29

1.30

1.31

1.32

1.33

1.34

1.35

1.36

1.37

1.38

1.39

1.401.41

1.42

1.43

1.44

1.45

1.46

1.47

1.48

1.49

1.50

1.51

1.52

1.4941Hig h

1.3149Low

Euro - US Dollar

12

mber

19 26 2

2012

9 16 23 30 6

February

13 20 27 5

March

12 19 26 2

April

9 16

1.260

1.265

1.270

1.275

1.280

1.285

1.290

1.295

1.300

1.305

1.310

1.315

1.320

1.325

1.330

1.335

1.340

1.345

1.350

1.355

1.360

1.365

Neckline

1.2628Low

1.3320Hig h

1.3006LowPotential Neckline

Euro - US Dollar


3/5

UPDATE

Fundamental

Technical

in association with

Authorised and regulatedby the FSADisclaimer

FUNDAMENTALS:

Since the Greek rescue deal was agreed, albeit after a tortuous period of negotiation,the Euro has enjoyed a reasonably robust correction, back from the lows reached

mid-January when speculation about the Euros imminent break up was rife.

The correction was all the more impressive as it coincided with a strengthening of USeconomic data which, given the disparity between the US and Euro zone economies,should have favoured the Dollar.

But after a long period of Euro weakness, traders seized the Greek rescue deal asan opportunity to take profit and re-assess the outlook for the Euro, hence the

correction.

And although the Dollar staged its own limited recovery through February into earlyMarch, driven by signs of stronger job creation and re-emerging concerns about theEuro zone debt crisis, it was snuffed out by comments from Fed Chairman BenBernanke.

At one point his remarks sounded as though the Fed might be open to yet another

round of QE, and indeed, last week he noted in a speech that US economic growthneeded to be much faster to create the volume of new jobs needed to bring downunemployment, which was taken to mean the Fed could still ease policy further.

But, despite the Dollar suffering a self inflicted wound, the Euro hasnt been able togain a clear advantage and again looks weak.



4/5

UPDATE

Fundamental

Technical

in association with

FUNDAMENTALS: CONTINUEDThere are three reasons in our opinion for this:

1. The US Economy continues to release data showing a strengthening recovery, withunemployment looking set to fall further as the weekly initial jobless claims report hasdeclined to around 350k,

2. The Euro zone debt crisis, isnt, as the French President and German Chancellor earlierdeclared, over.

3. The FOMC minutes released this week disappointed equity traders but pleased Dollar bullsby showing the Fed looks less likely to ease again unless the economy unexpectedly slows.

In short, the Euro zone economy is either on the brink of, or already in recession as theausterity measures demanded by the Germans bite. The Greeks have already said that theywill probably be back for more help in the not too distant future as the economy continues tocontract.

Similarly Italy is struggling to get through needed labour market reforms to bring about arecovery. Spain too has seen her unemployment rate climb to about 1/3 of the workingpopulation and there are fears that the austerity measures she has adopted will consign theeconomy to years of contraction.

Elsewhere in the Euro zone periphery the picture looks similar and a new phase of the debtcrisis can not be far off.

But in the US the ISM surveys released this week show an economy clearly embarked onrecovery, and if Fridays non-farm payroll report shows the pace of new job creation at leastbeing maintained or accelerating, the Dollar should rally further.Currency trading isnt about absolutes but changes in relatives and currently we judge theDollar has most of them in its favour.



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UPDATE

Fundamental

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the euro's vulnerablility resurfaces ig

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