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2 Jan 2014
Flash: Euro on shaky ground - BTMU
Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ believes that the euro is on shaky ground here at these levels and there are numerous factors suggesting downside risks in the early part of the new year.
Key Quotes
"Firstly, we are not big on technical analysis but every so often an important development is worth mentioning. The trendline resistance taking the record intra-day high in 2008 of 1.6038 and the 2011 intra-day high of 1.4940 was nearly touched again last week with the high of 1.3893 only marginally below that resistance line at 1.3903 – this trendline may well prove tough to breach especially after last week’s failed attempt."
"Secondly, there is evidence of a seasonal bias to the downside over the first four-to-six weeks of the year. Over the last fourteen years of euro trading, EUR/USD has declined in the first six weeks of the year on eight occasions, risen in five and was unchanged once. The annual seasonal chart for EUR/USD shows this upcoming period as being the worst on average for the euro."
Key Quotes
"Firstly, we are not big on technical analysis but every so often an important development is worth mentioning. The trendline resistance taking the record intra-day high in 2008 of 1.6038 and the 2011 intra-day high of 1.4940 was nearly touched again last week with the high of 1.3893 only marginally below that resistance line at 1.3903 – this trendline may well prove tough to breach especially after last week’s failed attempt."
"Secondly, there is evidence of a seasonal bias to the downside over the first four-to-six weeks of the year. Over the last fourteen years of euro trading, EUR/USD has declined in the first six weeks of the year on eight occasions, risen in five and was unchanged once. The annual seasonal chart for EUR/USD shows this upcoming period as being the worst on average for the euro."