A Super Tuesday for the Dollar ?
Exactly a week ago, US authorities mounted extraordinary legal acrobatics in order to shore up confidence in the US and world financial system. Today's quadruple testimonies (9.30 am EST) have no choice but to aim at the same objective, especially with the dollar and US equities ominously plummeting less than 3 days after the biggest banking bailout in history.
Euro Retreat Seen Limited at $1.4680
EURUSD seen joining European and antipodean pairs in losing some of Mondays gains as the excessive moves in oil prices are expected to stabilize.
Euro losses are seen extending down to $1.4710 and $1.4680 before some stability is likely to ensue ahead of Wednesdays 4 am EST release of the September IFO survey. Although the Business Climate and Current Assessment indices are both expected to show the fourth consecutive monthly declines, we anticipate a surprise increase in September to result from positive responses on the basis of lower oil prices and a weaker euro. This was the reason to the unexpected rise in last weeks release of the ZEW survey and we expect it to do the trick for the September IFO. Since the IFO survey has acted as the most consistent trigger of major euro moves (upside and downside), we expect Wednesdays release to prop the euro back above the $1.4750s and onto $1.4865-70. But prior to this, were to see temporary lows near $1.4680s.
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