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Market Bulletin 9th July 2010

Is the squeeze over in the Dollar Euro?

The Technical Trader’s view:
Euro - US Dollar

1.60 MONTHLY CHART

1.55

1.50 The long-term chart is a

1.45 Head and Shoulders Top
1.40 suggesting very much
1.35 lower.
1.30

1.2333 Low
1.25 The rally back to the
50.0%
1.20 Neckline is taking place
1.1662 Low 1.15 after the initial completion.
61.8%
1.10

1.05

1.00

0.95

0.90

0.85

0.80

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

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This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.
 in association with
Euro - US Dollar 1.64
1.63
High 1.6036 1.62
1.61
1.60
WEEK CHART
1.59
1.58
1.57
1.56
1.55
The rally back to the
1.54
1.53
1.52
Neckline is clearer here.
1.51
1.50
1.4716
1.49
1.48
1.47 There should be good
1.46
1.45
1.44
resistance there at 1.2730 or
1.43
1.42
1.41
thereabouts…though the
1.40
1.39 scale of the pattern allows
1.38
1.37
1.36
some short and medium-
1.35
1.34
1.33
term repenetration without
1.3270 1.32
1.31 prejudicing the whole….
1.30
1.29
1.28
1.27
1.26
1.25
1.24
1.23
1.2333- 1.2461 Lows 1.22
1.21
1.20
1.19
1.18
1.17
1.16
1.15
2008 M A M J J A S O N D 2009 M A M J J A S O N D 2010 M A M J J A S

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Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.
 in association with
Euro - US Dollar
1.395
1.390
1.385
1.380
DAILY CHART
1.375
1.370
1.365
1.360
1.355
Here is the short-term
Diagonal from
1.350
1.345
1.340
catalyst for the rally.
1.335
1.3118 Low 1.330
1.325
1.320
1.315
A completed bull Head and
1.310
1.305 Shoulders reversal opposed
1.300
1.295
1.290
to the bear longer-term H&S
1.285
1.280
1.275
1.270
1.265
Note the minimum
1.2528 1.260
1.255
1.250
move…up as far as 1.30 or
1.2333 Pivotal Prior Low from November 2008 1.245
1.240 so.
1.235
1.230
1.225
1.220
1.215 But remember the opposing
1.210
1.2133 Fibonacci support
1.205
1.200
medium and long term
1.195
1.190
1.185
resistance at 1.2730, and in
1.180
1.175 the very short term, note the
March
8 15 22 29 5
April
12 19 26 3
May
10 17 24 31
June
7 14 21 28 5
July
12 19 26 diagonal resistance, today at
1.2722. The coincidence is
powerful

A break up through there will

lead to a surge of fresh
short-term buying.

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Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
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This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.
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The Macro Trader’s view:

Despite the Dollar’s recent weakness against the Euro, we sense the market is undergoing a
correction rather than a trend reversal. The situation in the Euro zone remains delicate. Indeed,
the only thing that has changed in recent weeks is that the endless stream of negative
commentary about the Euro zone has virtually dried up.

This has allowed traders to recast their focus and right now the hot news is the surprise miss
firing of the US economic recovery. Recent data has remained soft with this week’s release of
a below consensus ISM non-manufacturing survey just the latest piece of disappointing news.

But why, if the Euro zone’s problems persist, are traders now buying the Euro?

Currency trading is a function of relative, rather than absolute, strengths and weaknesses, so
while in absolute terms the under lying fundamentals of the Euro remain flawed, in relative
terms it is the Dollar that is currently suffering from relative weakness due to fears about the
US economic recovery.

But the 2nd quarter US corporate profit reporting season is about to start and if the news from
the leading Banks and corporates beats market expectation, the Dollar could well recover and
throw the spot light back onto the Euro zone.

Moreover, with the Euro zone pledging to release the results of stress tests on leading Euro
zone Banks the Euro could quickly come under selling pressure once again. The fear was the
Euro zone Banks, especially in Germany and France are heavily exposed to the Sovereign
debt of several of the peripheral Euro zone economies that have been heavily downgraded.
Since the fear of Sovereign debt default is still very much alive with Greek sovereign debt
ranked as the second worst in the world, those stress test results may cause some difficulty for
the Banks and the authorities.

On the other hand, we judge the Dollar to be long-term bullish. Although the US fiscal
landscape is challenging to put it politely, and US interest rates cannot go any lower, the Fed
could still act to help support the flagging recovery.

SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
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It could buy Treasuries, thereby relieving some of the potential funding worries the
administration might have if they go for a 2nd stimulus. The Fed could also buy corporate
Bonds, either in the secondary market or at point of issue, thereby side stepping the Banks and
getting money out directly to ‘Main street’ in a direct effort to spur growth.

But however you view the situation, in the long term we judge the Euro to be flawed and in its
current incarnation will struggle to survive. Decision making in the Euro zone needs to be
centralized both politically and fiscally and we do not think the political will exists to bring that
about.

So patience is needed (and long Stops too), if the current correction is going to be ridden by
the Dollar Bulls.

Mark Sturdy
John Lewis
Seven Days Ahead

SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.