Week on June 1-June 6, 2008

EUR/USD failed to break significantly higher last week only reaching 1.5818 before moving lower, as the consolidation phase since the April 22, 2008 high at 1.6017 remains. However, the weekly chart made an outside weekly reversal, which means the EURUSD made a higher high, lower low and lower close than the prior week, thus strongly suggesting the EURUSD will move lower this week. To the upside, look for 1.5597-1.5640 zone the limit any upside attempts as these levels represent the 38.2% and 50% of the recent 1.5618-1.5461 wave. To the downside, 1.5414, 1.5228 and 1.5041 represent bear targets as a daily open and close below 1.5414 will add further confirmation that EURUSD will continue to move lower in the days ahead. And as previously mentioned, to the upside, a daily close above 1.5844 will firm up the EURUSD for the next rise towards 1.6017 and higher. As to the broad outlook, the long term trend from the November 2005 low at 1.1642 remains active as only a weekly close below 1.4346 will confirm the rise from 1.1642 is complete at 1.6017, with further downside risk towards 1.3830 to follow. So, to the upside, a sustained break 1.5844 will see further upside potential towards 1.6017 followed by 1.6173, whereas to the downside, a daily open and close below 1.5414 will confirm further downside risk towards 1.5228 and beyond.