Weekly Technical Analysis by Lloyds TSB

The euro is under increasing pressure. The past few months have seen equities range trading and, although there have been positive signs to note, the equity markets continue to look vulnerable to further falls.

The euro is under increasing pressure. The past few months have seen equities range trading and, although there have been positive signs to note, the equity markets continue to look vulnerable to further falls. With major supports approaching, the risk is developing for a breakout trade to the downside. DAX futures have managed to recover three times from 4066 support, however this coming fourth test does does not look likely to hold. Hopefully I am wrong and this is simply a bear trap, but for the moment the strategy for this week has to reflect the downward trending prospects for the euro and increased safe haven buying of dollars.

Interestingly, this is happening to the exclusion of the Swiss franc and Japanese yen, implying a break-down of the recent inter-market relationships. In this vein, gold is posed to break over $1000, traditionally a bearish dollar signal, but as gold is taking on the form of a safe haven currency, the relationship is less significant.

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