Euro Higher; Charts Indicate Test of 1.3132 Likely

The Euro is rallying this morning in New York on optimism triggered bytwo friendly U.S. economic reports.  This morning it was reported thatU.S. house prices continued to fall but at a slower pace thanestimated.

The Euro is rallying this morning in New York on optimism triggered by two friendly U.S. economic reports.  This morning it was reported that U.S. house prices continued to fall but at a slower pace than estimated.

Traders are reading this as a possible sign of a recovery in the U.S. economy.  U.S. Consumer Confidence was up in April.  Speculators are hoping this leads to more consumer spending but is most likely a positive reaction to the stock market rise.  Both reports are showing a slight rise in trader appetite for risk.

Gains are expected to be limited however as pessimism about the spreading Swine Flu virus is still overhanging the market.  U.S. banking system issues could also crop up at anytime.  A report from the WSJ saying the Fed’s may require Citigroup and Bank of America to put up more capital could blow up the market if it proves to be true.  So far the market hasn’t reacted much to the report, but will if it actually becomes a news story.

Technically, the hourly chart turned up on a trade through 1.3042.  The same chart indicates the market is on path for a test of 1.3132 to 1.3172.  It should encounter resistance in this target zone.