Forex News – 12th July 2011

Risk Aversion

Risk-aversion is back into play.

No plan has been finalized for Greece, growing concerns that European sovereign debt problems
may spread to Italy, the pressure Is slowly crawling its way to Spain causing massive sales in EUR
across the FX board.

It has been reported in the Irish Times that European diplomats believe the intensity of market
pressure on Italy and Spain may prompt EU leaders to contemplate a new round of radical measures
to tackle the debt emergency.

Since yesterday:

EUR/CHF: Down +264 pips

EUR/JPY: Down +359 pips

EUR/USD: Down +332 pips

EUR/GBP: Down +111 pips

EUR/CAD: Down +183 pips

This is one of the best time to enter the market. For the benefit of the new traders, and I have
mentioned this in previous reviews, 3 currencies will gain during risk aversion mode (instability).
The Japanese Yen, Swiss Franc and US Dollar.

Gold (XAU/USD) will also gain at the same time as investors seek safe-haven.

The Australian Dollar is being beaten to smithereens by the market as all hopes for a rake in 2nd
August meeting is begin erased, with over +80 pips decline at the time of this writing since the
beginning of the session.

The CPI y/y and the trade balance in The UK is due to be released at 08:30am GMT and expected
to have a big impact on GBP. Weak data will add fuel To the selling fire and my push GBP/USD
even lower, perhaps towards $1.5800 level.

The pair is struggling to break above to break above 21MA (0.8394) and 100MA (0.8398), which
resulted in a minor correction t0 0.8380 at the time of this writing.

Please note the potential for reversed H&S. The pair may dip towards 0.8344 but a firm break above
0.8398 will confirm the pattern, targeting 0.8453 as part of its 100% projection of the reversal.

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