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Masoud : EUR/USD Weekly Review 21 Nov 11

Hello koala king and folks.

Good day to you.

Despite the insistence of some of the leaders of the member countries of the Euro Zone, countries which require the purchase of bonds by the central banks of Europe so as to reassure financial markets is still facing reluctance. Thus the cost of borrowing for Italy and Spain is still rising.

Barack Obama, America’s president said in response to the euro that as long as a structured program to send a clear message to the market that Europe wants a stable and strong euro is not seen, the turmoil in the market will continue.
Inflation in the seventeen countries of the euro area is rising faster than the previous months. This is probably due to expensive oil and causes the increasing cost of living of European citizens.

France is racing to avoid increasing deficit and a reduction of it’s credit rating.

Fitch warned that America’s banks are in serious risk of financial crisis due to exposure to the Euro Zone. It was mentioned that six U.S. banks, JP Morgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley owned the equivalent of 37 billion euros in bonds of the euro zone countries.

Fitch Credit Rating Agency announced that the recession in Italy and throughout the euro zone creates difficult conditions for Monty Mario, Italy’s new prime minister. The company has added that due to distrust by the market causing increased cost of borrowing for Italy, one of the most difficult task required of the new administration is to convince investors and restore confidence in capital markets.

Last week the euro financial crisis entered a new phrase. Governments in Italy and Greece have changed and new governments are mostly composed of professionals, not politicians. Their work is based on the increase of strict austerity programs.

From a technical perspective: As I said in the midweek analysis and I expected, the EUR/USD reacted to the bottom line channel. The currency pair is still in a downtrend channel and while the EUR/USD is below 1.37, the main trend is downward. On the other hand, if the currency pair breaks out of the downtrend channel and closes above 38% Fibo, it is likely to rise to 1.40.

Have a great weekend.

Masoud is a businessman and a Senior Forex Koala. Connect with him at our page on Facebook.
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