Euro steady; market braces for Greece bond issue

The U.S. Dollar continued weaker against most major currencies at the mid-session. Trader demand for risky assets helped to pressure the Greenback

The U.S. Dollar continued weaker against most major currencies at the mid-session. Trader demand for risky assets helped to pressure the Greenback. The weakness in the Dollar is being attributed to optimism in the Euro Zone over the potential positive impact of the new European Union and International Monetary Fund bailout proposal for Greece. Today, Greece is expected to issue bonds priced in Euros. This will be the first test as to how investors perceive the viability of the aforementioned bailout proposal.

The EUR USD is up at the mid-session as weak shorts continue to cover after last week’s EU and IMF package to help Greece should it be unable to find financing in the capital markets. The proposal amounts to a pledge to help Greece out of the Euro Region’s biggest deficit if it runs out of traditional financing options.

The stronger Euro is pressuring the USD CHF today. The higher the Euro rises, the less likely the Swiss National Bank is going to intervene to protect its economy and currency. A better Euro will also allow the SNB to focus on the possibility of an interest rate hike at its next meeting.

Demand for riskier currencies is helping to boost the GBP USD. This currency pair is still in a downtrend, but beginning to show signs of the formation of a secondary higher bottom at 1.4797. Regaining a key retracement area at 1.5010 to 1.5080 could trigger additional short-covering, but the trend will remain down until 1.5381 is violated.

Signs that the global recovery is gathering momentum are underpinning the USD JPY. Although this market is technically overbought after last week’s surge to the upside, buyers are showing support because of today’s stronger U.S. equity markets.

Greater demand for higher risk assets is helping to pressure the USD CAD. The long-term downtrend could resume as traders begin to price in the strong possibility of an interest rate hike by the Bank of Canada. Speculators are also anticipating a better U.S. Non-Farm Payrolls Report on Friday.

Expectations of better retail sales for March and talk of another interest rate hike are helping to boost the AUD USD at the mid-session.

Reserve Bank of Australia Governor Stevens said house prices are “getting quite high”. This signaled to traders that interest rates may need to be increased further. Stevens also said that borrowing costs need to be returned to “normal” levels. Both of these comments are encouraging traders to by the Aussie.

Renewed buying in higher risk assets is also giving the NZD USD a boost. The higher-top, higher-bottom formation suggests that the main trend is likely to continue up. Regaining a 50% price level at .7124 could trigger an acceleration to the .618 level at .7199. A break out over the last swing top at .7178 will reaffirm the uptrend. There is also some speculation that the Reserve Bank of New Zealand may raise interest rates as early as June.

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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