SPOT FX VIEWS AS OF Oct 05, 2007

Euro Spot Outlook as of Oct 05, 2007

VIEW:

Spot Euro closed higher as Dollar again started slipping against all majors. Supports are Seen at 1.4090 followed by 1.4040.Resistance is at 1.4155 a break of which could test 1.4200.RSI is showing a turn around from the overbought zone indicating prices are still likely to correct lower. Prices however closed near the 8-day ema at 1.4130 and the 21-day ema at 1.4015 indicating bullishness. Averages in the MACD are above the zero line in the indicator suggesting bullishness; only a crossover below the zero line will indicate bearishness.

ECB decision of unchanged interest rate was in line with wider expectation however Trichet’s comments limited the single currency’s rise, as he did not mention the monetary policy to be on an “accommodative” side. While he clearly signaled that the central bank intend to keep the rates on hold for near future as he preferred to not mention “strong vigilance” in his speech, the phrase that is followed by a rate hike in the next meet.

Today’s release of US Non farm payrolls will be a key driver for the currency’s rise.

RECOMMENDATION: As expected minor resistance at 1.4155 will be seen. Good chance of a test of 1.4200 seen or even higher as long as 1.4070 holds downside attempts.

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