Worries Drive EUR USD Lower at the Mid-Session

The EUR USD is trading lower at the mid-session. Much of the sellingpressure is related to concerns over the Euro Zone economy and theupcoming actions by the European Central Bank tomorrow.

The EUR USD is trading lower at the mid-session. Much of the selling pressure is related to concerns over the Euro Zone economy and the upcoming actions by the European Central Bank tomorrow.

Others are seeking safety in the lower yielding Dollar because of growing concerns regarding the U.S. banking system. News that the S&P Corp. cut the ratings on five German banks fueled additional pressure on the Euro. This action could be related to the banks’ exposure to Central and Eastern European toxic debt.

Tomorrow the European Central Bank meets to decide the future direction of interest rates for the European Union. With the European Union just this week-end issuing a forecast of a severe decline in the economy, there is no question the ECB will slash rates to 1.0%. 

The difficult part is figuring out if the ECB is going to implement an asset buyback program. Even if you guess right, you still have to get the amount and the duration of the plan correct. Another item bothering traders is the possibility the ECB will announce a plan but choose not to implement it immediately. This is what the Bank of Canada did two weeks ago, fueling the current rally in the Canadian Dollar. The mounting uncertainty is triggering selling pressure on the Euro this morning.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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