If there was not enough confusion, EZ inflation has decided to pop further above ECB's comfort level this morning. This is putting some doubt in the theory of aggressive cut at upcoming ECB meeting. While traders are still pushing Euro down on overall dollar end-of-quarter demand, chances of 50 bps cut are pretty much gone, and cut in general is in doubt as well. So with this in mind, I am still looking for some Euro weakness heading into the meeting:
1. DXY is fighting flat-on-the-year resistance @ 78.96
2. Once above, it will fly to 79.70 level - 150 wsma / 200 wema laminate
3. Next level of resistance after that would be 81.30 - 2011 high
4. Based on the above, EUR/USD is heading for lower levels next week to 10 days by 200 - 300 pips
5. My projected targets are: 1.3230 and 1.3110
6. If DXY really gets going to 81.30 level - EUR/USD will dive to 1.2870 (I am not expecting this in the next 10 days though)
My last week's 1.3350 projection was almost met (within 10 pips) http://viewonmarkets.blogspot.com/2011/09/dxy-trade-is-on.html
Good luck!
Update: Oct 3 @ 2:23 pm edt
EUR/USD hits 1.3230
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