EUR/USD view for week SEP/03/2007

I. Important news from the week:

1. Mortgage crisis - Bernanke said FED will 'act as needed'. He also said FED will cut the discount rate again, if necessary. More general info here

2. Half hour later, Mr. George W. said that US government need to do something for the fellow Americans who are "in trouble", but will not help the speculators.

3. After FED and Bush speeches, Gold was 10 USD up to ~670 USD, US Stocks was up, lenders Freddie and Fannie are up 4% each. EUR was unexpectedly down.

4. Many analysts such Puru Saxena and Robert Chapman believe that FED will lower the rate.

5. BOJ (Bank of Japan) could raise rates - more info at Reuters

5. US mortgage crisis, have one rather funny effect. People from Florida speaking about lot of mosquito, comes from the pools from foreclosed houses. The sanitary inspections thinking about to fix the problem :-) . The live truly give us interesting stories :-)

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II. The wedge in USD index:USD index is half way down the long term wedge. Actualy nothing new here, picture is unchanged, and is bearish for USD short term.

Before, I wrote following, and once again I copy/paste it:

For first-time readers, and those who do not know, the
wedges are reversal patterns. This wedge is bullish for USD index, no matter
what people say for US economy, debt bubble etc. I am sure that at the end of
the year, the USD will be lower, but wedge suggest we will have one bounce
before that.

This is still valid, but probably we will first see USD index down to the support, and then another rise, probably will break the wedge top.

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III. Wedge in EUR/USD:

EUR/USD 3 days chart:This chart is similar to the weekly chart, but is better as time frame. We see same wedge as in USD index. EUR currently rising to upper boundary. We had some drop Friday, but this is something that occurred before too. The wedge is bearish for EUR, but it must first go to the top.

EUR/USD 4 and 1 hour charts:
I decided to do one and same trendlines on 2 different charts, so to be more comfortable when analysing them.

4 hours chart:
1 hour chart:
Ok, what we have - "Big" channel made in brown. "Small" channel, shown only on 1 hour chart - blue top and brown bottom line.

We have a resistance on 1.36.80 - yellow. It was broken Friday, just price to go down to the support 1 hour after that. May be this line is not important anymore.

There may be a accending triangle - yellow and bottom brown line, or we may even have simetric triangle, shown on 4 hours chart - pink line and bottom brown line.

The picture is still bullish for EUR, and we must see EUR raice to ~1.37.50 area.

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IV. Summary:

EUR continue to rise, USD to fall.

Caution is warranted, since most of annalists are very bullish to USD right now!!!

Happy week and trade!!!

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III. Carry trade with AUD/JPY:

See the post here: AUD/JPY update