Euro Zone Economic News Pressures Dollar

Today’s report showing better than expected growth in the Euro Zone during the second quarter signaled to traders that the worst may be over triggering a renewal in confidence in the EUR USD.

Today’s report showing better than expected growth in the Euro Zone during the second quarter signaled to traders that the worst may be over triggering a renewal in confidence in the EUR USD.

Although this currency pair rallied on the fundamental news, technical factors have prevented it from surging to the upside. Currently this market is finding resistance at a .618 retracement price at 1.4309. A failure to hold 1.4266 could indicate lower markets to come.

The GBP USD is also trading better but backing off from the top. The current rally seems to be piggy-backing the strength in the Euro. Fundamentally the British Pound should feel pressure because of the bearish actions by the Bank of England last week. The BoE still feels the UK economy is weak forcing it to expand its quantitative easing program.

Stronger crude oil and equity markets are helping to put pressure on the USD CAD. It’s still too early to tell if this current weakness is a resumption of the down trend or merely position evening. Last week’s closing price reversal bottom is still intact which means this pair still has a chance to turn higher by the end of the week.

Sharply higher equity markets are renewing interest in higher yielding assets. This is triggering a strong surge in the AUD USD and NZD USD. The New Zealand Dollar is in a position to test the high for the year at .6817 but the question is does it have the buying power to breakout to the upside. The Aussie is also in a position to test its high at .8470. Both of these markets are likely to exceed these highs if the September E-mini S&P 500 can break out over 1016.00.

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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