by Ashraf Laidi
Feb 10, 2009 12:01 | 2 Comments

EURUSD - EURUSD Feb 10 (Chart 1)

EURUSD consolidation is set to break out in medium term as ECB seeks to avoid telegraphing rate cuts beyond March. A breach of $1.3030 resistance in medium term is looming. USD downside risks underlined by record Treasury borrowing, which is boosting yields at expense of USD. Positive moving average cross-over (50 above 100) for the first time since July also provides technical basis along with bullish weekly stochastics. Breach of $1.3030 leads to $1.3080, followed by $1.3130.


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Comments (Showing latest 2 of 2) View All Comments
Connecticut, United States
Posted Anonymously
14 years ago
Feb 10, 2009 22:35
As always, excellent analysis Ashraf.

There is something i wanted you to clarify if possible. Your comment "USD downside risks underlined by record Treasury borrowing, which is boosting yields at expense of USD. "

Know how short term forex traders consider the US-Euro 10yr yield spread, (which correlates inversely with EUR/USD pair), well, if the US yields rise faster than the Euro yields, US-Euro spread would be becoming more positive, therefore, a short EUR/USD action would present itself. Is the main difference in argument invalid due to a supply shock of Treasuries, where the private demand for Treasuries is insufficient or not attractive enough.

It just seems contradictory, so i presume there is something vital i am missing.
Posted Anonymously
14 years ago
Feb 10, 2009 13:05
Hi Ashraf,
interesting notice about 50 dma over 100dma.

widening yields for spain, ireland, italy etc over bunds suggests some eurozone participents will have problems stimulating their economies and fill their budget gaps which should be negative for the euro.
also read some rumours about 400billion russion loans for euro banks looking to go sour.

fundamentally, the euro should do well in the medium to long term.

But I cannot understand the stregth of the dollar in the midst of all these Fed programs. Perhaps will have better clues after I read risk related chapter in your book.

a month ago, I consider euro to be 1.45 in six months and 1.65 by end 2009.
would u like to comment?

but now, it looks like euro fundamentals are fast deteriorating and Trichet does not look smart anymore - when he raised rates in summer 08 - it looked like he knew something the market did not.

(Very much like US - When Greenspan was at the helm, his impression was that he he exactly what he was doing - but now it appears that US is cleaning up the mess created from his exuberence)

btw... I think you should be running your own hedge fund..!