Euro Rebounds off Low on Possible Central Bank Buying

The EUR USD is trading weaker at the mid-session on renewed concerns that Greece will default on its debt.

The EUR USD is trading weaker at the mid-session on renewed concerns that Greece will default on its debt. Earlier today the spread between Greek Bonds and German Bunds moved to a historically wide level signaling that investors feel that Greece may not be able to finance its surging debt burden. Conditions are expected to worsen as austere financial measures imposed by Greece to shore up its economy begin to take hold. Losses have been limited by rumors of central bank buying.

The GBP USD has recovered from earlier selling pressure, triggered by a weaker than expected U.K. services industry reports. Despite the strong intraday comeback, gains have been limited by the key 50% technical level at 1.5297. Look for downside pressure as long as this price holds as resistance.

Lower equity prices are helping to pressure the USD JPY. Technically, this market has been under pressure since Monday’s closing price reversal top. The chart pattern suggests a minimum 2 to 3 day break with a possibility of a near-term decline to a 50% level at 92.26.

The USD CHF is trading higher because of the weaker Euro. Traders expect more intervention by the Swiss National Bank. Technically this pair is in a position to change the trend to up on a breakout over the last swing top at 1.0751.

Talk of a large U.S. investment bank buy is helping to boost the USD CAD after this pair tested the waters below parity earlier in the session. Oversold conditions and a possible closing price reversal bottom may encourage short-covering over the near-term. The strong surge in gold appears to have been neutralized by the weakness in crude oil, thereby having little effect on the Canadian Dollar today.

Higher gold prices and an early recovery in U.S. equity markets helped drive up the AUD USD. The trend is this market is decisively higher, leading to speculation that this rally will not stop until the high for the year at .9329 is tested over the near-term.

The NZD USD is trading better following a slight follow-through to the upside following yesterday’s minor reversal bottom. Higher gold prices are helping to underpin this market. Technically, this market turned the main trend down on the daily chart on Tuesday. The current rally could be short-covering, but some traders feel that the possibility of an interest rate hike in June is lending some support.

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

Disclainer: