EUR/USD view for week SEP/10/2007

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. This is from 2 weeks ago, but is still an important news.

2. Awful employment figures send EUR/USD to 1.3805. The drop was reported as 4000, but real drop is about 17000-18000 :(

3. Gold @ 700+ USD, note this was weekly close.

4. Many analysts such Puru Saxena, Robert Chapman and James Puplava believe that FED will lower the rate. Mr.Puplava said "Is no longer if they will, but how much". Same time Tim Wood believe rate cut will be "not this time" - Will FED continue to cut rates

6. Central bank of Sweden raised the rates, while Central banks of EU, CA, UK, AU kept their rates unchanged.

5. May be is a rumor, also may be is not from this week, but first Amero is minted.

6. Luciano Pavarotti died. Rest in peace.

An Amero coin. "They" claim is real.

Some words for future FED meeting - there are several possibilities:
1. Not to cut the rate - this will be bullish for the dollar.

2. Not to cut the rate, but to cur discount rate some more - this is generally bearish, but may be still considered bullish for the dollar. Dollar probably fall, but not that much.

3. To cut the rate with 0.25% - this is generally bearish, but may be still considered bullish for the dollar. Dollar probably fall, but not that much.

4. To cut the rate with 0.50% - this is what the business wants. Very bearish for the dollar.

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II. The wedge in USD index and EUR index:USD index is more than half way down the long term wedge. Actually nothing new here, picture is unchanged, and is bearish for USD short term. The drop in the index surpass the old low from some weeks ago.

Because the wedge suggest level bellow 80, I will post following chart from Douglas Gnazzo (because I do not have paid account in Stockcharts.comAs you can see, back in 1992, USD was down once 78.43, so the drop that the wedge suggest is not in uncharted waters at all (at least to 78.43 :-) )

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.

Note, because of volatility, this could happen this or next week

EUR index - generally, is same as inverted USD index. Only small difference, is that the raise did not surpass the old high some weeks ago.

The ratio EUD index/USD index is more like EUR index. The high did not surpass the old high.

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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. Target is almost 1.40. Note because of high volatility, we may see 1.39.80 for about 1-2 hours, and then the EUR to drop sharply.

EUR/USD 4 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:
The picture is bullish for EUR, and we must see EUR raice to ~1.38+ area.

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IV. Summary:

EUR continue to rise, USD to fall.
Reversal will be soon, but we will see 1.39.80 - 1.39.90 before that.

Happy week and trade!!!

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V. Carry trade with AUD/JPY:

Will not be updated this time

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VI. Gold, HUI and some ratios:

See here