Euro Rises after Greece Makes Move in Right Direction

The EUR USD rose this morning to its highest level since February 17th as shorts covered positions after Greece announced additional budget cuts and tax increases in an attempt to shore up its budget and gain favors from the European Union.

The EUR USD rose this morning to its highest level since February 17th as shorts covered positions after Greece announced additional budget cuts and tax increases in an attempt to shore up its budget and gain favors from the European Union.

Greece’s new plan to take control of its fiscal problems drew positive comments from Luxembourg’s Jean-Claude Juncker who said “Greece’s ambitious program to correct its fiscal imbalances is now credibly on track.”

Technically, the Euro’s main trend turned up this morning on the daily chart for the first time since December 7th when the currency crossed the last main top at 1.3692. The action by Greece and the possibility of new government regulation of hedge funds could trigger a massive short-covering rally over the short-run. The charts indicate that there is room to the upside to 1.4009.

The strengthening Euro has triggered some light short-covering in the GBP USD. This current move is not expected to lead to a change in trend however. The British Pound remains the weakest currency because of the U.K.’s wide budget deficit, soft monetary policy and political uncertainty.

The USD JPY is trading lower at the mid-session despite strong demand for risky assets. I’m still confused about the move in the Japanese Yen. What I think is happening is the Yen isn’t getting stronger, the Dollar is getting weaker.

The strength in the Euro is putting pressure on the USD CHF. The downtrend was reaffirmed following a break through the last main bottom at 1.0694. Traders are relieved that the Swiss National Bank intervention campaign may be over and are buying back Swiss Francs. Downside momentum could take this market down to 1.0513 over the short-run.

Greater demand for higher risk assets is helping to boost the AUD USD. After pausing momentarily near a .618 retracement level earlier today, the Aussie turned around and challenged the last main top at .9070. The move through this price turned the main trend to up, but the follow-through rally hasn’t been too impressive.

After the British Pound, the New Zealand Dollar is the next weakest currency. The daily trend is down, but buyers appear to be trying to build a support base. Concerns over the viability of the current economic recovery are helping to keep a lid on gains. The hike in interest rates by the Reserve Bank of Australia is encouraging some selling as well as the rally in the Euro. A strong surge in equities and commodities late in the trading session could turn this market positive into the close.

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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