Weekly Review and Outlook: Euro Found a Bottom, Risk Aversion to Ease Temporarily

[Forex-Outlook]

There were two important developments to note last week. Firstly, selling climax in Euro was past, with help of intervention. EUR/USD spiked through 2008 low of 1.2329 and reached as low as 1.2143 after German's announcement of ban on naked short selling. But the common currency then staged a broad based rebound as SNB buying shot EUR/CHF more than 500 pts higher. There were also rumors of coordinated effort from ECB, FED and BoJ to count the "unorderly" depreciation of the common currency. In any case, while the overall outlook in EUR/USD is still bearish, we believe the pair has found a short term bottom and would anticipate some more recovery ahead.

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