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Masoud EUR/USD Weekly Review 16 Jan 11

Hello koala king and folks.

Good day to you.

Due to the debt crisis of the euro zone, Germany in the fourth quarter of 2011 fringes on the border of a recession and an economic crisis may happen. GDP growth in Germany in the quarter fell 0.25%.

Christine Lagard, president of the International Monetary Fund met with various officials to discuss about Greece’s debt crisis. It was reported that the President of the International Monetary Fund IMF is trying to hold a meeting of leaders of the euro zone’s leading economies to find a way out.

The Italian government succeeded in twelve billion euros of bonds. The one-year bonds of Italy in the stock market fell to 2.7 percent. A rate of close to six percent was seen in the previous sale.

Fitch Credit Rating Agency had previously announced that due to market uncertainty and increased cost of borrowing in Italy, one of the most difficult things for Mario Monty is to convince investors and restore confidence in capital markets.

The European Central Bank ECB which in the past two months cut interest rates did not further cut at its first meeting in the new year. Mario Draghi, president of the ECB after the meeting told reporters that although the tensions in financial markets might inhibit economic activity in the euro area, according to some indicators encouraging signs of stabilizing can be seen. However the economic outlook suggests that the economic uncertainty still remains high.

Standard & Poor’s Credit Rating Agency mentioned that the economic outlook for the euro area countries is negative. The credit rating of countries like France, Austria and Slovakia were reduced. This probably increased investors’ fears and concerns.

Representatives from the World Bank warned of the probability of a Greece default and it had a negative impact on European equities.

From a technical perspective: The EUR/USD is still within the downtrend channel and the channel is valid. As I said in the midweek analysis and I expected, the value of the euro against the dollar dropped. While the currency pair is below the 1.2880 level, the main trend is bearish. I think target of this loss is 1.2480.

Have a great weekend.


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