Short-Covering Driving Euro Higher as Trend Remains Down

The Euro is up on the news that German business confidence rose from 26 year lows but the daily swing chart still indicates a down trend.

The Euro is up on the news that German business confidence rose from 26 year lows. This is a sign that government stimulus and interest rate cuts are working. Even with the better numbers the European Central Bank is still expected to cut interest rates to 1% and announce a plan to purchase assets. Speculators are now betting on an economic recovery by late 2009 on the belief that the worst may be over.

The daily swing chart indicates this current rally is still just a retracement of the 1.3582 to 1.2884 range.  The first upside target range is 1.3233 to 1.3315.  A change in trend to the upside will occur on a trade through 1.3582.  This suggests that the current rally is being driven by short-covering.