Sunday, December 03, 2006

The euro and the dollar

Despite a 5% decline in the dollar relative to the euro, it is too soon to judge whether that was more of a "technical" correction and short covering or the start of a larger move. Unless the euro moves up beyond the $1.35 range to the $1.38 range and above, there is nothing here to pay too much attention to.

Part of the move was surely technical, as once the euro moved above technical "resistance", short positions had to be covered and momentum speculators starting to come out of the woodwork. But as the initial momentum has petered out, the short-term speculators may begin to lose interest unless there really is a sustained movement of dollars to euros.

-- Jack Krupansky

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