12th May 2011

UPDATE
Technical
Fundamental
What drives the
Dollar?
in association with

Authorised and regulated

Disclaimer
by the FSA
 What drives the Dollar?

Euro - US Dollar 1.64

1.63
1.62
MONTHLY CHART
1.61
1.60
High 1.6036
1.59
1.58
1.57
1.56
The market has been recently driven
in association with 1. 5139 High
1.55
1.54
1.53
by a powerful bull structure of a bull
1.52
1.51 falling wedge.
1.50
1.49
1.48
1.47

1. 4281 High
1.46
1.45
But that is being tested now rather
1.44
1.43
1.42
severely.
38. 2%
1.41
1.40
50. 0% 1.39
1.38
1.37
Note the pull back to test the top
UPDATE
61. 8%
1.36
1.35
1.34
diagonal of the wedge.
1.33

Technical 50. 0%
1.32
1.31
1.30
1.29 And the re-penetration of the support
Fundamental 1. 2333- 1. 2461 Lows
1.28
1.27
1.26
from the Prior High…
1.25
1.24
1.23

Low 1.1880
1.22
1.21
1.20
( NB the Fibonacci retracement
1.19
1.18 38.2% has yet to break)
1.17
161.8% 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 O N D 2011 M A M J J

Euro - US Dollar 1.510

DAILY CHART
1.505
1. 4941 High
1.500
1.495
1.490
1.485
1.480
In the short-term, the market has
1.475

1. 4517 High
1.470
1.465
broken the rising diagonal, from
the beginning of the year, and the
1.460
1.455
1.450
1. 4281 High

1. 4248 High
1.445
1.440
1.435
support from Prior Highs at
1.430
1.425 1.4517, 1.4281 and 1.4248.
1.420
1.415
1.410
1. 4034
1.405
1.400
1.395
It looks poor short-term but the
1. 3960 High
1.390
1.385
1.380
influence of unbroken medium-
1.375
1.370 term bull patterns (above)
1.365

1. 3497 High
1.360
1.355
should warn the bears against
1. 3452
premature selling…certainly
38. 2% 1.350
1.345
1.340
1.335
1.330
1.325
there is no clear Top formation
1.320
1.315
1.310
in place yet….
1.305
1.300
1.295
1. 2975 Low 1.290
1. 2878 Low 1.285
1.280
1.275
1.270

Disclaimer 25 1 8
November
15 22 29 6
December
13 20 27 3
2011
10 17 24 31 7
February
14 21 28 7
March
14 21 28 4
April
11 18 25 2
May
9 16 23
 What drives the Dollar?

FUNDAMENTALS:
in association with The Dollar staged a lightening recovery towards the end of last week, especially
against the Euro, driven by three main events:

1. Anxieties about the Euro zone Sovereign debt crisis intensified as speculation
continued to grow that Greece might yet be forced to restructure her debts,
2. The ECB held interest rates unchanged, with Trichet failing to provide guidance
UPDATE about the timing of any future rate increase, and
Technical 3. Anxieties emerged about the health and durability of the Global recovery.
Fundamental
Although the Euro zone debt crisis has been running for over a year, the Euro had
until recently, enjoyed a strong rally against the Dollar, helped by strong Euro
zone/German data and the advent of an ECB tightening cycle. Whereas the Dollar
seemed undermined by the inability of Congress and the Administration to reach
agreement about a deficit reduction plan.

However, with oil prices also enjoying a strong rally recently, concerns about Chinese
inflation had begun to dog the global markets. Particularly when further Chinese rate
hikes designed to restrain inflation and cool the economy looked likely.

The fear was if the Chinese economy cooled too much, the Global economic
recovery could be damaged. At the same time, the US published a weaker than
expected ISM non-manufacturing survey and higher than expected unemployment
rate, which seemed to fit the emerging pessimistic view of renewed economic
weakness.

But why then did the Dollar enjoy such a strong recovery?
 What drives the Dollar?

FUNDAMENTALS: CONTINUED
in association with Until a replacement is found, the Dollar remains the global reserve currency, so
although US data cast some doubt over the US recovery last week, the Dollar
fulfilled its safe have role, as traders became nervous about the Euro zone
sovereign debt crisis once more.

So far the Euro zone crisis has claimed three victims:

UPDATE • Greece,
Technical • Ireland, and
Fundamental • Portugal.

Of these Greece was the first to be rescued, but she is far from out of trouble. There
is talk in the markets and in the news that a debt restructuring is imminent - although
denied. And Ireland is resisting pressure to raise her corporate tax rates, in
exchange for lower rates on her rescue package.

In short the EU/Euro zone has managed this crisis poorly. The Euro had amazingly
appeared to decouple its self from these worries and rallied against the Dollar over
recent weeks, as the ECB had begun to talk tough on inflation; raising rates at the
April meeting, but the May meeting and Trichet press conference left traders a little
confused about the next policy move sending the Euro into a reversal.

So although the US has a burgeoning debt crisis of her own, which was recently
acknowledged by the rating agency S&P, that is for now being put to one side as
traders/investors/analysts still judge a US debt default is highly unlikely, whereas the
relatively young Euro zone is still seen as a possible candidate for failure.

The Dollar’s current strength is probably a correction, but until confidence in the
economic recovery and Euro zone’s debt management returns, the Dollar could rally
a little further.
 in association with

SEVEN DAYS AHEAD

Authorised and Regulated by the FSA
UPDATE 124 REGENTS PARK ROAD LONDON NW18XL
TEL +44 (0) 7849 922573 E-MAIL msturdy@sevendaysahead.com,
Technical pallwright@sevendaysahead.com
WEB SITE SEVENDAYSAHEAD.COM
Fundamental
The material and information set out in this research is not intended to be a quote of an offer
to buy or sell any financial products. Any expression of opinion is based on sources believed
to be reasonably reliable but is not guaranteed as to accuracy or completeness.

The material and information herein is general and for informational purposes only. Although
Seven Days Ahead endeavours to provide useful information they make no guarantee as to
the accuracy or reliability of the research.
The derivative market comprises volatility and considerable risks. To the maximum extent
permitted by law no responsibility or liability can be accepted by Seven Days Ahead, any
company or employee within its group for any action taken as a result of the information
contained in this presentation. You are requested not to rely on any representation in this
research and to seek specific advice from your accountant, legal adviser or financial services
adviser when dealing with specific circumstances.

Seven Days Ahead is regulated by the UK Financial Services Authority.