Euro Posts Strong Weekly Close

The Euro surged to the upside this week as better than expected U.S.economic data helped shift trader sentiment away from the safe havenU.S. Dollar to the more risk driven Euro.  The strong close on the weekly chart indicates a followthrough rally is likely next week.

The Euro surged to the upside this week as better than expected U.S. economic data helped shift trader sentiment away from the safe haven U.S. Dollar to the more risk driven Euro.

The European Central Bank also cut its benchmark interest rate to 1.0%. This was one of the worst kept secrets and was already priced into the market. The ECB also finally got around to announcing its plans to buy government assets. The new plan to buy up to $80 billion in government bonds is being viewed more as a credit easing measure than quantitative easing. The Euro responded by rallying sharply higher.

Technically this market has become range bound between 1.4719 and 1.2456. There is a potential double-bottom forming at 1.2329 and 1.2456 but based on the classic definition of a double-bottom will not be confirmed until 1.4719 is crossed on the weekly chart.

Currently, the EUR USD is finding resistance at a retracement zone at 1.3587 to 1.3854. The close over the 50% at 1.3587 indicates strength next week but the rally could be labored until the .618 resistance is breeched at 1.3854.

The ultimate upside objective of the current move is a retracement of the 1.6039 to 1.2329 break to 1.4184 to 1.4628. A rally of this magnitude is possible especially if the U.S. economy continues to show signs of improvement and traders demand more risky assets.

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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