We begin the week with some officials of the European Central Bank, speaking about their concerns of the high price of the Euro. Trichet even said he was in favor of US officials, such as Treasury Secretary Henry Paulson, wanting a strong USD. However we had some ECB officials also stating that the price was not a worrying factor and that they had to stick to controlling inflation. This week will be very interesting due to the BOE and ECB meetings, we’re going to get a real view of their thoughts and whether they are concerned or not with the current price action.

We begin the week with ISM for Euro Zone as well as CPI on Monday. This was overshadowed due to the statements I talked about in the beginning of this report. Tuesday we will get PPI and GDP for Euro Zone, PPI is expected to read higher in the year to year view and GDP is expected to be stable. Not much to look into these releases unless we see a big move in PPI. Later on Tuesday Ben Bernanke will be speaking to regional Bankers, it will be important to see if there is some already looking to save themselves from bankruptcy. This will surely be important to the stock market and to the general view of the US economy. Wednesday will bring Retail Sales and the Beige Book, both of them will be very important. Retail Sales is expected to read poorly and Beige Book will give us a look inside to what might happen in the next FOMC meeting. Thursday is the most important day of the week, ECB and BOE will be deciding interest rates. Both of them are expected to maintain them unchanged. However it will give an opportunity to Trichet to take the EUR/USD to a more comfortable level. We’ve seen him do it before and ew believe that his comfortable level is clearly below 1.4900. Finally on Friday we get Non Farm Payrolls and Unemployment, both could be a negative hit to the US if they continue to surprise to the downside.

Technical side continues to fall to second terms. Follow fundamentals to get your money. Technicals are shouting short due to the record levels we are reaching daily. Wait for indicators to fall back into place before you begin using technical analysis to set your entry and exit points.

EUR/USD

Keep an eye to ECB press conference after the rate decision. We’re clearly reaching levels that get ECB officials uncomfortable. We could see them step in and begin the USD correction into levels below 1.4900. Don’t jump to conclusions and anticipate this move because they could also move the other way and state that high euro is not a problem.

Daily Graph

EUR/USD is back to record heights. Indicators are reaching overbought territories

• Take Profit 1:1.5170
• Take Profit 2: 1.5090

Published on  Tue, Mar 4 2008, 11:31 GMT