Euro Set to Retrace Break

With no major economic data to drive the Forex markets in anyparticular direction, some investors used today’s Treasury auction andtechnical factors to drive the U.S. Dollar lower. Others were moresensitive to the rise in the commodity markets.

Analysis

With no major economic data to drive the Forex markets in any particular direction, some investors used today’s Treasury auction and technical factors to drive the U.S. Dollar lower. Others were more sensitive to the rise in the commodity markets.

The Euro closed up against the Dollar today. Despite news that Ireland’s debt rating was reduced because of credit and banking issues, this market remained firm throughout the day.

Fundamentally, traders were leveling off recent short positions because of the U.S. Treasury auctions. Investors were concerned that yields would rise which would increase the debt burden on the U.S. economy.

Last week a shift in sentiment took place which made the U.S. Dollar a more attractive investment. The change in sentiment occurred following the release of the better than expected U.S. Non-Farm Payroll report. This could mean that investors may begin to buy the Dollar and sell the Euro on the perception that the U.S. economy will recover from the recession first. Recently traders had been selling the Dollar on good news.

Technically, last week’s reversal top was confirmed by follow through selling on Monday. Now it appears this market will have to retrace the first leg down. If sellers come in at 1.4070 to 1.4133 then take this as a sign this market is ready to roll over to the downside.

If a top is in then expectations are for a corrective move down to 1.3610. If the market takes out 1.4337 then 1.3804 will become a new higher bottom and the uptrend will resume. 

Daily Chart

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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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