Monday August 8, 2005 - 11:42:42 GMT
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Black Swan Capital - www.blackswantrading.com
Euro for now...but
“The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth.”
The stronger than expected jobs report from the US on Friday, coupled with ongoing signs of strength in the US economy suggests the Fed is far from finished. The path of interest rate “normalization” now appears much longer than recently believed.
Yet traders are warming again to the euro on the view the euro zone economy is improving—and the European Central Bank will not cut rates. Two key levels of focus for the euro seem to be 12500 and 12650, which represent standard retracement numbers based on the high near the April high of 13120 and the July low near 11870:
We still consider this move in the euro as a dollar correction that began at the start of the year. We think sooner or later (12500 or 12650) the power of the US economy and rising interest rate differentials will overwhelm euro optimism and lead to another leg up in the buck.
Black Swan Capital
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