08 April 2011

EUR/USD : Clarity Delivered

  • Trichet : Rates still "very accomodative", to monitor developments "very closely" = no pre-commitment (as always) but overall tone makes a summer rate hike seem more likely than not. Brief pullback post ECB/Trichet to 1.4240 from where we have managed to rally back strongly.
  • Interest rate differential by relative central bank action going one way, favoring long EUR/USD. [I expect the market set rates to diverge from central bank actions, but that's a different story]].
  • Monthly : Upside breakout of down trend line in progress. Points to target as high as 1.5141. No obvious intermediate chart points. Still long way to month end for confirmation of break though.
  • Weekly : Breakout above 1.4281 looks likely to be confirmed unless something very drastic happens between now and NY close tonight.
  • Position : Sitting on core long. Buy dips against 1.4281 stop on new positions. Clear now that in spite of already long positioning, market wants to buy this still.
  • This is making it likely that the USDX will finally get a weekly close below 75.63 too, pointing to 74.17 next.

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