Bearish Euro; Bullish CDS, Fixed Income And Equities

The correlation between the euro and risk perception has broken down, with the currency plunging even as risk appetite gains further momentum. Our bearish outlook on the euro has been reinforced by the unit's retreated from trendline resistance at US$1.3800/EUR on March 17. The subsequent break through support at US$1.3400/EUR on March 24 augurs well for our US$1.2900/EUR target.

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