Not a game changer, medium-term

Author: Jamie Coleman | Category: News

The move by the Fed to provide liquidity to the ECB, Swiss National Bank, Bank of England and the Bank of Japan has boosted EUR/USD in the near-term but is not a game-changer medium-term.

The Fed provided a a similar line of credit to the European central banks in 2008. That didn’t stop EUR/USD from falling to the 1.20s in 2008 from 1.6000.

To me, it is a sign that the funding crisis is even greater than we knew.

That said, with the market very short shares in European banks, there is a massive short-covering rally going on and it may last a few days. Watch trendline resistance at 1.3935 which has been tested.

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