EUR USD has Green Light to Test High for Year

At the mid-session, the EUR USD is posting a large gain. Yesterday’s supportive comments from European Central Bank President Trichet were not enough to stop the Dollar’s slide.

At the mid-session, the EUR USD is posting a large gain. Yesterday’s supportive comments from European Central Bank President Trichet were not enough to stop the Dollar’s slide. Matters weren’t helped after Luxembourg premier Jean-Claude Juncker said that the Euro’s rally hasn’t hurt the Euro Zone recovery. This comment gave traders the green light to drive the currency higher.

The GBP USD is trading lower at the mid-session. This is either being triggered by a negative reaction to the Bank of England minutes or overbought technical conditions. The major news from the BoE minutes was the fact that the vote was split regarding the expansion of the central bank’s quantitative easing program. The initial reaction to the split vote was positive as it suggested the bank would not expand further. The market, however, broke after a follow-through rally failed.

The U.S. reported an unexpected dip in Housing Starts. This bad news has kept downside pressure on the equity markets all morning. A sharp break in the stock markets could trigger a huge reversal in the Dollar as it will cause traders to flee higher yielding assets and currencies.

The AUD USD and NZD USD have attracted selling pressure because of the weaker equity markets. Watch for these markets to break hard if equity markets sell-off late in the session. The Aussie is still seeing weakness after the Reserve Bank of Australia minutes suggested that a rate hike over the short-term is not likely.

Higher gold and crude oil are supporting the Canadian Dollar. Canada’s consumer price index rose last month but this report was inline with expectations. The Bank of Canada is not too concerned about inflation, but rather the value of the currency. Despite the rally today, traders still seem tentative about pushing this currency higher. The fear is the BoC will implement a strategy that will push down the value of the Canadian Dollar.

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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