Archived IMT (2011.01.19)

USD INDEX extends decline below the all-important 200-week MA (79.6) after closing below it last week. Note in the chart that the USDX never could close above the 55-week MA (blue). The fact that the index has quickly reversed under the 200-week MA suggests the possibility for losses to extend towards the 3-year trendline support near 77. Note this trendline support did hold up in Nov 2009 and Nov 2010. In the event that USDX fell below 78, EURUSD would likely retest $1.37. EURUSDs weekly stochastics have improved significantly. Greek officials denied newspaper reports that Germany was considering a debt restructuring plan, which would allow Greece to buy back its own debt. The rumours pushed up Greece-Germany 10 year spreads 8.63% (highest since Jan 11). Euros latest advances occurred this morning after Irish PM Cowen won a vote of confidence to lead the ruling Fianna Fail party. The vote secures his position until Parliamentary elections are held in March.