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Currency In Focus: Euro

31 July 2011 | About Forex

Friday is going to be a big day in the markets as it is highly likely that we will go into the weekend without a resolution to the US debt ceiling debate.  While this will certainly weaken the Dollar, at the end of the day when risk aversion increases due to potential structural issues, USD is favored.

The intermediate term trend is definitely higher for the Euro, despite the recent problems they have had with their own debt crisis.  While they finally have come up with some solutions to help their debt-laden countries continue to function, they are not out of the woods just yet.

One of the more interesting properties of the Euro is that it is known as the “anti-Dollar”.  So much of the recent Euro strength is a direct result of US dollar weakness.

We expect the Dollar to continue to be weak, at least until Friday.

Bias: Neutral

Trade:  Sell EUR/USD at 1.4540, just ahead of R3 resistance. Stop at 1.4580.  Take profit at 1.4370.  Reward/Risk Ratio: 5.5:1

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