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Drivers, direction and degree of the EURUSD
Date 29/09/2010 11:41  Author webmaster  Hits 893  Language Global
29 SEP 2010

By Tyler Durden ¦ Zero Hedge

Who the hell knows what is going on with the EURUSD - the only thing that matters now is which central banks will get away with more debasing of its own middle-class. Since Germany still recalls Weimar, the Fed may win this round.

Yet, Brown Brothers sees som increasing short-term strength in the EURUSD, then a gradual decline as the increasing weakness in Europe unravels:

"After rallying about 6.25% since September 10, the euro may enter a consolidative phase before advancing into the $1.38-$1.40 area in the first half of Q4. However, the euro may then surrender those gains in the second half of the quarter, as QEII is discounted (or not delivered at all), and the loss of economic momentum in Europe, ahead of a 2011 fiscal contraction, keeps debt restructuring fears elevated. The increased possibility that the EFSF has to be drawn upon may also spur speculation that the ECB may not be in a position to remove its emergency liquidity provisions; and indeed may have to actually embark on either more bond purchases or take some additional measures. All this may leave the euro trading around $1.30, if not lower, by year's end."

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