The EUR/USD pair spiked on the session during Thursday as the announcement of USD liquidity measures out of no less than 5 central banks will help the EU banks borrow in USD. The move effectively takes a lot of pressure off of the banks in Europe as far as a freezing of credit and lending. However, it does not protect against sovereign debt risk as they are priced in Euros. The pair rocketed up to the 1.3950 area, but slowed and fell back a bit in the later hours of trading. The 1.40 area is just above, and it appears there will be serious resistance at the mark. The pair is susceptible to headline risk, and any news coming out of the EU that is negative will push this pair much lower. We feel there is a massive trade coming, but we will more than likely have to test the 1.40 area first, and make our decision from that price action.
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