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Lea Jakobiak
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Article / 27 September 2012 at 10:17 GMT

EURO squeeze - done and dusted?

John J Hardy John J Hardy
Head of FX Strategy / Saxo Bank
Denmark

The great Euro squeeze appears to be behind us, if we look at EURGBP and EURJPY in any case. For confirmation, turn to the EURCHF and EURUSD charts in the days and weeks ahead.

EURGBP has been the favourite recent way to express renewed anxiety over the situation in the EU, where Spain is suffering the double threat of a secession crisis and a strink of budget promises that have all gone unfulfilled because the country needs to default and revalue, not continue down the economic toilet bowl of EU-enforced debt deflation. After a couple of days of teasing through a support area, EURGBP went into full scale sell-off mode as Rajoy unveiled a draft budget today.

Chart: EURGBP
The 0.7965 area support gave way with a bang today after two days of dipping through without closing lower.

EURGBP

Chart: EURJPY
EURJPY is also in full retreat – having taken out all of the high-momentum gains from earlier this month, though the optimists might say that 99.20 has yet to give way… Note the trendline in play as well.

EURJPY

Chart: EURCHF
Of course, we can’t declare the Euro in 100% retreat mode until EURCHF has slammed back down into the 1.20 peg…

EURCHF

Chart: EURUSD
And the USD continues to suffer the effects of infinite QE. There are all manner of support levels we need to break before we can call this chart in full reversal – the finaly one being the 1.2500 psychological level and the low point of Labor Day week, when the markets got back down to business after the summer.

EURUSD

1y
Woodstock Woodstock
Great ! It was really nice to read and understand your point of view. Thanks for taking time and sharing your views here, we learners are liking it so much. Richard @ Woodstock, England

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