Forex Weekly technical analysis of EUR USD Aug 1-5,2011

Last week was particularly volatile with a high of 4520 and a low of 4250 before ending the week on 4397. As we wrote last Sunday, negotiations on the debt ceiling U.S. weighed heavily and will weigh more than last-minute agreement before Aug. 2 on parity. Failing agreement, the dollar may be under pressure and there is a risk to see him get high.
On the other hand, Europe is not doing better. Spain has just seen its financial score deteriorated and elections are scheduled for the fall. The island of Cyprus is almost bankrupt and it will appeal to Europe to get by.
Thus, it seems a sort of game of ping pong between the two sides of the Atlantic and parity goes up or down depending on economic bad news.
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