SocGen: The Euro Has Had A Huge Rally, But Now It's Toast

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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