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Global currency watch


Fundamental FX review of Q1 2012 and look ahead to Q2


FX


EUR/USD opened the New Year at 1.2963, quickly dropping to its low so far of 1.2624 shortly thereafter by the middle of January. Seemingly


against all


odds, the Euro has subsequently fared pretty well against the Dollar, despite the weight of ongoing issues and circumstances such as ECB monetary easing, conflicts over


debt repayments


and political infighting that in different times may have seen the


currency weaken even further. But these are not different times and markets have adjusted to the new normal; according to CFTC reports in February, speculators continued to bet against the fortunes of the Euro based on the fundamentally negative factors on debt agreements and defaults that were in the headlines pretty much every day - is it not incredible that Greece has


not technically defaulted,


despite mammoth bond holders’ paper?


haircuts


on


The short positions got to such a point that they quickly became of record magnitude and of course what doesn’t go down usually goes up; this fuzzy logic goes some way to explaining the squeeze higher in the rate since those January lows and at the end of last month we saw a series of 4 successive daily highs at just


FX TRADER MAGAZINE April - June 2012 9


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