The Euro was able to correct a little of the harsh sell-off fromWednesday. Some of the buying was related to the oversold condition ofthe market. Others saw it as a buying opportunity following positivecomments from European Central Bank President Trichet.
The Euro was able to correct a little of the harsh sell-off from Wednesday. Some of the buying was related to the oversold condition of the market. Others saw it as a buying opportunity following positive comments from European Central Bank President Trichet.
Following the ECB meeting which resulted in its main interest rate being left unchanged, Trichet helped rally the Euro by stating his relief that the Euro Zone economy would recover by the end of the year. This helped take some of the downside pressure off of the Euro which began with yesterday’s sell-off.
On Wednesday, the Euro was hit hard to the downside as investor sentiment seemed to shift back toward the safe-haven Dollar. Tomorrow’s U.S. Unemployment Report may trigger even more weakness if the report shows weakness in the U.S. economy.
Technically, this market is showing signs of topping out because of the possibility of a weekly closing price reversal top. A close under 1.4159 will put this market down for the week. Although this market would have to follow-through to the downside next week to confirm this reversal top, this action would be a strong indication that the selling is greater than the buying at current levels.
Based on the short-term range of 1.4337 to 1.4070, watch for this market to retrace to 1.4235 to 1.4204. If it starts to attract selling pressure in this zone and the unemployment report turns out bullish for the Dollar, then look for the start of a sizeable sell-off.