Week on June 9-June 13, 2008

EUR/USD moved lower last week reaching 1.5364 but saw a dramatic move up late in the week fueled by ECB President Trichet’s unexpected and hawkish comments on Eurozone inflation concerns and the outlook of possibly ECB future rate hikes. The week closed out at 1.5776 which suggest the pair will continue to move higher this week with a sustained break of 1.5844 confirming the next rise to 1.6 and beyond. To the downside, look for prices to hold above the 1.5604-1.5660 zone, whereas a daily close below 1.5477 will confirm the recent consolidation phase remains. 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 1.5477 will confirm further downside risk.