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11/25/2007 - Has the Euro peaked?

Posted by FOREX.com's Weekly Strategy in November 23rd 2007  
* Has the Euro peaked?
* US housing, confidence data to keep the focus on the negative
* Eurozone sentiment indicators will be key
* JPY-crosses (carry trade) setting up potential for a further drop

Thanksgiving week saw the USD take another dive, giving up further ground to the JPY as overall market volatility continued to make life difficult for carry trade positioning. In last week's update, I suggested that a daily/weekly close below the 108.70 level in USD/JPY would likely signify another 'ratcheting down' of the USD/JPY rate, with additional potential to the 105/106 area. We got the daily/weekly close below that level and that keeps the focus on the downside while it holds as resistance. Only a recovery past the 109.70/80 area would signal that the downmove is stalling and possibly reversing. The relatively sharp bounce seen on Friday generated a 'hammer' on the daily candlesticks, frequently an indication of an upside recovery after a decline, so Monday's price action will be critical.  Full text »

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Filed under: Weekly Strategy