Euro Trades Flat in Choppy, Two-Sided Trade

The Euro wavered from up a few pips to down a few pips mostof the New Yorksession as very limited news changed hands. Last night Greececoncluded a successful 6-month and 52 week T-Bill auction.

The Euro wavered from up a few pips to down a few pips mostof the New Yorksession as very limited news changed hands. Last night Greececoncluded a successful 6-month and 52 week T-Bill auction. Demand was strongand the bid-to-cover impressive. Interest rates were high, but better than theywere last week. Traders are now waiting for the next move by Greece. They are either going to besatisfied with the proceeds of the auction or have to use some of the fundsavailable from the European Union bailout package. Investors remain cautiousabout going long the Euro. Hedge funds are still selling rallies.

The GBP USD traded higher after a better than expected tradereport. The data showed that the deficit narrowed substantially in February. Afterthe initial thrust to the upside, the British Pound settled into a range beforeturning lower.

British Pound traders are becoming nervous about holding onto longs ahead of next month’s elections. Investors are still waiting foreither party to submit a plan to reduce the budget deficit. Monday’s closingprice reversal top was confirmed, indicating a developing downside bias.

The sideways Euro helped to hold the USD CHF in a rangebetween two retracement levels at 1.0610 and 1.5068. Look for this pair toremain range bound until the Euro makes a move. A weaker Euro will pressure theSwiss Franc. A strong Euro will diminish the possibility of an intervention bythe Swiss National Bank.

The inability to break U.S. equity markets lent somesupport to the USD JPY but this pair was still trading lower in limitedtrading. This pair is walking down a Gann angle at 93.27. If this angle fails,then look for an acceleration to 93.67. A continuation of the downtrend couldtrigger a break to 92.26.

A rift has developed between the Japanese government and theBank of Japan. The government wants the BoJ to be more aggressive in fightingits battle against deflation.

The USD CAD has been trading in a range for about four days,indicating impending volatility. Oversold conditions have been contributing tothe low momentum and low volatility. As long as last week’s reversal bottom at.9975 holds as support, then there is the possibility of a rally back to 1.0138.Breaking through the bottom is likely to trigger an acceleration to thedownside, now that a large group of traders have committed to a rate hike onJune 1st rather than in July. Higher interest rates will attract more foreignbuying of the Canadian Dollar.

The AUD USD was under pressure most of the New York session in a follow-through breakfollowing Monday’s closing price reversal top. Traders are paring positionsafter Monday’s Australian Housing report showed mortgage approvals had droppedunexpectedly. This could mean the Reserve Bank of Australia may be consideringskipping an interest rate hike at its next session. Traders are adjusting theirpositions in anticipation of this taking place. The chart indicates that a moveto .9194 is likely over the near-term.

The NZD USD traded flat to lower most of the day-session.The lack of buyers and the lack of conviction in holding higher yielding assetshelped to pressure this market. The late session turnaround in the U.S. equitymarkets prevented this currency pair from selling off 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