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Euro Gains on Geopolitics & USD Strains
Euro strength and dollar weakness emerge in thin trading activity as geopolitical uncertainty creeps higher, propping gold to a 10-week high.
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Ashraf Laidi
London, UK
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16 years ago
Dec 29, 2008 18:09
Answer to JOSEPH regarding his question on EURUSD in another section of this website. Yes, $1.4650 is a solid resistance that once tested is likely to send euro back towards $1.3200s. PPP theory in forex takes time to develop (about 5-7) years. Just because ECB interest rates are not at zero% does not mean it is behind the curve. Let us not forget about the depth and speed of the break US economic growth and market/household wealth, which continues to prove a real surprise for Federal Reserve officials up to this day. In April 2007, Bernanke said US housing is primarily limited to subprime (defaults soared in May). In June 2007 he and his colleagues still deemed inflation as the real danger (they slashed rates in August). In July 2008, they had the market believe rates were going up in September 2008. Do you see the pattern?
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