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Equity Price Action Impacts The European Pairs

The four hour trend is Neutral. The euro showed some signs last week that it has the strength to break above the 1.3600 area, but bearish momentum that is still coming from Greece and the U.K. have halted the single currency upwards moves.

Investors are looking again at the 1.3450 to provide some relief to the euro, but if it breaks lower, the road is almost clear until the 1.3200 area. Daily Chart: ATR is 140 pips. RSI is oversold. SMA is @1.3700. 1-month 71% correlation to S&P moves. Favor a straddle.

The pound The four hour trend is Short. The pound has plunged almost 300 pips throughout the European session, on concerns that the U.K. government and central bank will sacrifice the currency to help the feeble economy.

Unless authorities take measures to calm investors, this weakness will continue. Daily Chart: ATR is 160 pips. RSI is at oversold. SMA is resistance @1.5710. 1-month 76% correlation to S&P moves. Favor a straddle.

The four hour trend is Neutral. Price action is driven by two main forces- the market on one side, which wants to strengthen the currency against the euro, and on the other is the SNB, which is seeking to devalue the national currency.

The 4 hour chart just broke a linear trend-line that runs from 1.0115, and signals potential weakness on the pair. Momentum is weak. Daily Chart: ATR is 105 pips. RSI is overbought. SMA is support. 1-month 68% correlation to S&P moves. Favor a long Eur/Chf play.

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