EUR/USD view for week DEC/17/2007

I. Important news from the week:

1. Gold still correcting (~$800), even FED worries for ... the inflation.

2. Market decline

3. Currency debase continue. FED cut rate, but with 0.25%. Market was disappointed. USD raise, Stocks was down.

4. Day after FED cut the rate, FED announce that they prepared co-ordinated action with ECB, BOE and Switzerland National Bank for adding liquidity on the markets. They will do two auctions in DEC and two more in JAN. On this auctions, they will lend out "some" USD to other banks, funds or persons. Because I am not a "pro", you can read here.
All this is nothing more than a co-ordinated helicopter drop.
Unfortunately for Bernanke and Co. the stocks once again dropped. USD raise to new high.

5. Crude raising ~$92.

---

II. The parallel uptrend (old wedge):

USD index weekly chart:


Is it clear now that USD bounced. Bounce will continue to 78, because there are a strong resistance that was formal support from the wedge. I am pretty sure it will hold, and once USD index go to 78, it will began to decline.

EUR index weekly chart:

Is not sure if USD raise or XEU going down, but here we have a mirror image of USD index. The support (resistance of USD index) must hold.

EUR/USD weekly chart:

Same chart as XEU. Remember colors of the trend lines. No comments here.

EUR/USD 1 day chart:

The daily chart would be bearish, but last day with huge drop to 1.44.20 shows the reversal. The brown channel is sure broken, and pink channel is probably broken too. We could see a rally here to upper boundary of the pink channel, but generaly the trend is down to the blue line @ 1.42.

EUR/USD 4 hours chart:

Here we could see the pink channel again. could be broken, could be not broken.

---

III. GBP/JPY H&S:

No chart, but we still have huge H&S formation. Target is under 200.

Currently GBP is no trade.

---

IV. Summary:

No trade recommendations this week.

I personally will no trade, mostly because of the Xmas and New Years holidays.

From the other side - The market is irrational now, and liquidity is everywhere. You can not judge what will happen if at the same time both FED and ECB dropping money with helicopters and B-52's.

As I wrote

Remember EUR is just a worthless paper as the USD is. Eurozone has own problems too. The only reason EUR go up against the USD is because Eurozone and ECB do not inflate as much as FED. Or may be they do now. Who knows. The inflation we see now, is actually from money supply increased 6 mo ago. So we do not know if ECB printing money or not.

As we saw Canada cut their rate, hoping CAD to be debased against USD.
UK cut rates too, because guess what? - They have subprime problem too. This rate cut will debase their currency too.

There is only one real currency and is called GOLD. As you can see, gold rising against all currencies, not only against the USD. This may mean only one thing - inflation rising. Actually some people believes gold is bubble, but this is wrong opinion (will explain why I thing that some other time).

Happy week and trade!!!

---

IMPORTANT NOTE:
Next week there (probably) will be NO weekly view.
On the New Years Day there obviosly will be NO weekly view eighter.