Saturday May 15, 2010 - 12:31:30 GMT
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Forex Blog - EURO: Pivotal Big Figures Targeted
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GVI Forex Jay 10:35 GMT May 15, 2010
Last week's eur/usd 734 pip range was excessive by any historic measure. When viewed in terms of the EZ "all in" stabilization fund, the euro plunge is even more bearish. This leaves the Oct 28, 2008 low at 1.2331 exposed and I would not want to be the one managing sell stops in Aust-NZ barring any weekend news. Should 1.2331 be taken out, then we revert to pivotal big figures as targets, 1.22, 1.20 and 1.18. The obvious targets will be 1.20 and the 1.18 area cited in my previous post (also Al's measured move target). Only 1.25+ would negate the risk.
With all that said, last weekend I was thinking the EZ had bought some time and we would trade 1.25-1.35 for awhile as bond markets steady and the fx market took a breather. Instead, the bond markets steadied in Europe while the euro took the brunt of ongoing concerns. Now I am thinking 1.20-1.30 or 1.15-1.25 as possible ranges but after seeing a 734 range last week, calling for 10 big figure ranges does not make a lot of sense.
Re intervention, CBs intervene when they deem markets disorderly (a 734 pip weekly range qualifies for disorderly) but Trichet gave no hint of any alarms being set off in the article I posted below (John has been pointing out they want a lower euro but doubt they want it at this pace).
Last week we saw the euro spike higher into the Europe open each of the past 3 days (smallest one was on Friday) only to get smacked down hard. This is a pattern to watch but doubt we see a repeat of it this week although it is worth keeping in mind.
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