The euro has exploded over the last week, and is now up to 1.384 from just 1.33 on September 24th, yet the sudden run leaves the currency vulnerable to a sharp pull-back, according to a technical note from Societe Generale:
EUR/USD is likely to decline to the1.3335/65 support area, with steps at 1.3560 and 1.3510. Given today’s breach of the ST rising support line drawn from the September low of 1.2645, the down-move initiated at 1.3810/20 yesterday is probably not over. EUR/USD is likely to decline to the 1.3335/65 support area (*), with steps at 1.3560 and 1.3510. It would take a downside breakout of the MT rising channel to target the June low of 1.1875.
Technicals aside, we can’t think of a currency more vulnerable to headline risk than the euro as we enter the final stretch fo 2010 given all the near-term Eurozone sovereign debt concerns.
(Via Societe Generale, Techtonics Forex, 5 October 2010)
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