Comment: The Euro found a record high at 1.6020 rather sooner and a little higher than we had expected, which we see as an interim top only. It has now moved into a phase of correction and consolidation, something that might continue for another three months. At the moment we shall allow for dips to the psychological 1.5000 and no lower than 1.4500. These are seen as good medium and long term buying opportunities for renewed US dollar weakness very late this year and into 2009. A target of 1.6500/1.6700 around year-end seems realistic, before drifting back to 1.6000 by this time next year. Note that few analysts share this view, consensus opinion being that the Euro has found an important top and that it will weaken to 1.4500 in 12 months’ time.
A weekly close below 1.4500 would force us to review our medium and long term outlook.
