Equity Surge Helps Euro but Buyers Still Shy at Current Levels

The rally in the equity markets is boosting the price of the EUR USD as traders are seeking higher risk assets. Fundamentally this current rally has been labored as traders don’t seem to want to buy strength until they are sure the Euro Zone economy is beginning to recover.

The rally in the equity markets is boosting the price of the EUR USD as traders are seeking higher risk assets. Fundamentally this current rally has been labored as traders don’t seem to want to buy strength until they are sure the Euro Zone economy is beginning to recover. Counter-trend traders have been selling the rallies in front of the high for the year at 1.4337. Shorts could be thinking the European Central Bank may issue a statement regarding the high level of the Euro and its negative effect on Euro Zone exports.

Traders are chasing the GBP USD higher today in a sympathy rally triggered by the strong surge in equity markets. Like the Euro, long traders do not seem to be buying with much conviction as this market has not been able to break through the high for the year at 1.6743. Many traders are reluctant to take a sizeable position ahead of tomorrow’s Second Quarter Preliminary GDP. Traders are expecting to see another decline. Issues regarding the U.K. budget deficit are also casting a bearish pall on this market.

The USD CAD is getting hit hard for two reasons. First crude oil is soaring which should help Canadian exports. Secondly the rally in the stock market is helping to trigger a bull move in Canadian stocks. A close on the low will put this market in a position to test the low for the year at 1.0783.

The USD JPY turned the main trend up on the daily chart on the move through 94.78. The strong surge in equity markets is driving traders out of lower yielding assets like the Yen. News that Japanese exports were at the low end of the estimates helped support the market overnight.

The AUD USD is in a position to challenge the higher for the year at .8263. Today’s bullish move in U.S. equity markets is triggering huge demand for higher yielding assets like the Aussie.

The New Zealand Dollar is beginning to weaken at the midsession after moving to a new high for the year. This move may be technically driven based as investors may be feeling this market is getting ahead of itself. A lower close could indicate that a profit-taking break may be starting.

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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