THE RISE OF OIL

As our last post has stated, 'currencies remain range-bound'. Sentiment driven movements this morning have catapulted the Euro up again within its 1,30 to 1,40 band. The Euro/Swissie and Euro/Yen crosses at key support levels need to be watched. While the Swiss have successfully defended its 1,20 price limit set versus the Euro, a countertrend price movement was unable to break through any meaningful level. 1,25 needs to be broken and a test of 1,30 should happen in order to make the spike low in place a key reversal low.

Euro/Yen hovers around the critical 100 mark. As long as the Euro can hold the 100 level versus the Dollar we expect no immediate down move of the Euro versus the Yen. Chart sentiment, however, still remains weak.

The rise of oil during these economic times in Europe and the US makes it difficult to judge the overall outlook. It seems that the recent attempt to break 80 Dollars to the downside was a last try to establish lower prices. The likelihood of a year-end-oil-price above $100.00 is now quite high and will remain a shadow over economic recovery scenarios.

Let us watch the month-end price levels before attempting to establish a more mid-term view on future price movements.

Yours sincerely,
Gerhard Pilz