Forex Zone (Forex Zone)
Czech markets  |  November 05, 2012 08:44:15

Europe starts to travel Japan?

UBS has published an interesting perspective on today's eurozone and the polemics of parallels with Japan 20 years ago. First, points out that Greece, Spain and Portugal are in a deflationary debt spiral and the political need to keep them in the euro area outweighs the economic benefit of those countries.

UBS gives today's Europe, with an aging population and structural rigidity, the parallels with Japan in the early 90s of the last century. Most points in a banking system that is přeúvěrován, undercapitalized and have bad credit and fiscal policy. This mix in the eyes of UBS means that we should expect cumbersome economic activity over the next 5 years.

As regards developments in the monitored pair EUR / USD, so that on Friday showed significant weakness. When he tested the base, which we pointed out a few days and the price has tested a strong support around 1.2840. With a large market pressure eventually closed under this strong support. This, in our view opens the way to test targets 1.2807 and support under this goal around 1.2790.Next we see significant support around 1.2760.

Given the strong directional motion on Friday, the day today expect more consolidation character. Above the current market price (1.2835), we see significant resistance around 1.2855 and 1.2875.

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