Euro Falls on Greece, Portugal Woes

The Euro is continuing to plunge after Fitch downgraded Portugal’s credit rating. On-going concerns regarding efforts by Greece to obtain financial aid from either the European Union or International Monetary Fund and this latest development with Portugal could worsen if additional credit rating cuts are applied to Spain, Italy and Ireland.

The Euro is continuing to plunge after Fitch downgraded Portugal’s credit rating. On-going concerns regarding efforts by Greece to obtain financial aid from either the European Union or International Monetary Fund and this latest development with Portugal could worsen if additional credit rating cuts are applied to Spain, Italy and Ireland. Traders are reacting as if this situation will spread to other sovereign nations as the European Union continues to drag its feet amidst the already dire Greek outlook.

At the mid-session the U.S. Dollar is higher across the broad against all major currencies as investors seek protection from the drop in higher yielding assets. Fear could spread throughout the markets into the close if support for the Euro continues to erode. Investors are showing their support for the Dollar by selling off equities, gold and crude oil overnight. In addition, stops are being hit as the Dollar Index soared to a new high for the year.

The GBP USD is trading sharply lower. The British Pound remains vulnerable to the downside because of the weakening U.K. economy and the threat of a ‘hung Parliament” based on poll survey results ahead of the upcoming election.

The USD CHF is trading above a 50% level at 1.0703 and headed toward the .618 retracement level at 1.0749. Talk is circulating that the Swiss National Bank has been actively intervening to prevent its currency from rising relative to the Euro. This is raising come concerns that the SNB will soon be listed as a currency manipulator by the U.S. Treasury Department.

The USD JPY has broken out of a triangle formation to the upside. In the process the main trend turned up on the trade through 91.08. The next challenge for this market is the late February top at 92.14.

The USD CAD is trading higher after regaining an old bottom at 1.0205. The current chart formation suggests impending volatility with a bias to the upside. After confirming last Friday’s closing price reversal bottom at 1.0060 earlier in the week, this market appears to be building upside momentum which could send this market soaring to a major 50% level at 1.0369.

The AUD USD is trading lower and beginning to accelerate to the downside. The current chart pattern suggests that this market has room to break to the downside with .8914 a potential target over the near-term. A plunge in U.S. equity markets in reaction to the weakness in the Euro could send investors scurrying out of higher yielding currencies.

A similar situation to the one developing in the Aussie Dollar is taking place in the NZD USD. Traders seem to be shying away from aggressively shorting this market and in front of a minor retracement zone at .6992 and .6948. A shift in risk sentiment back toward risk aversion could pressure the New Zealand 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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