Overnight Events/Technical Levels Pressuring EUR USD

Overnight events are encouraging safe-haven buying in the Forex marketsin Europe. CIT bankruptcy concerns and explosions at hotels in Jakartaare sending investors to the safety of the U.S. Dollar and Japanese Yen.

Daily Analysis

Overnight events are encouraging safe-haven buying in the Forex markets in Europe. CIT bankruptcy concerns and explosions at hotels in Jakarta are sending investors to the safety of the U.S. Dollar and Japanese Yen.

The flight-to-safety rally is also triggering weakness in emerging market equities. The developing fear mentality could spill over into the U.S. Forex and equity market openings where traders are already nervous about today’s U.S. Building Permits and Housing Starts Reports.

Major earnings reports also have investors worried as Dell, Bank of America, Citigroup and General Electric are all set to report. Earnings have moved the Forex and equity markets all week as demonstrated by the increased demand for higher risk assets following bullish reports from Goldman Sachs, J.P. Morgan and Intel Corp. earlier in the week.

Today is also an option expiration day in U.S. equity markets. This could increase volatility which may have a direct effect on trader demand for risky currencies. Weaker than expected government reports are most likely going to hurt the British Pound and Euro as traders will buy the Dollar on the notion that the global economy is still weakening. A sharp break in the equity markets should trigger selling pressure in the Australian and New Zealand Dollar. Weak equities and falling crude are likely to keep down side pressure on the Canadian Dollar. If today develops into an extremely weak day in the equity markets then the big winner could be the Japanese Yen.

Technically, the EUR USD is trading at the high side of the 1.4201 to 1.3832 range and between two retracement levels inside of the 1.4337 to 1.3832 range at 1.4112 to 1.4042.

The EUR USD will turn bullish over the swing top at 1.4201. A break back under 1.4042 will be a sign of weakness with 1.3998 the next downside target.

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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