Greece/ EU Aid Package Fails to Calm Investors

The Euro remains under pressure this morning after theannouncement of the $146 billion aid package for Greece failed to calm investors andrestore confidence to the Euro Zone. Traders are reluctant to throw theirsupport behind the Euro because of lingering problems in Spain, Irelandand Portugal.

The Euro remains under pressure this morning after theannouncement of the $146 billion aid package for Greece failed to calm investors andrestore confidence to the Euro Zone. Traders are reluctant to throw theirsupport behind the Euro because of lingering problems in Spain, Irelandand Portugal.

Over the week-end, members of the European Union and theInternational Monetary Fund agreed to a 110 billion Euro aid package over threeyears. Greece,however, had to commit to an even more austere budget cutting plan thanprevious agreed too. Even with the commitment by Greece, Euro investorsremained worried that the financial cuts the country had to endure may be toomuch at one time for the country to handle.

Even if Greeceis able to follow-through on its commitment, investors still feel that the highdebt levels in Portugal and Spain may meanthat the Euro is likely to remain under pressure. Without an improvement ininvestor sentiment, investors feel that the Euro is likely to continue to fall.Many traders realize that the shorts are still in control of the markets andthat each rally is likely to be short-covering rather than new buying and arelikely to be met by fresh selling.

Despite signs of a bottom on the daily chart, the Eurofinished lower last week. The daily chart is reflecting a short-covering rally;the weekly chart is indicating that investors still lack the conviction to turnthe Euro into a buy.

The GBP USD is under pressure this morning. Traders areslashing long positions ahead of this week’s election on May 6th. Uncertaintycontinues to linger in the markets because no clear cut leader has emerged inthe pre-election polls. Traders arestill concerned that a close election may result in a hung parliament whichwill make it difficult for the legislation of austere budget cutting measureswhich must take place in order to balance the budget.

Clearly, the U.S. Dollar is stronger against the Euro andBritish Pound this morning. Demand for higher risk commodities and stocks ispressuring the Dollar however. Gains are being seen in the Canadian Dollar,Australian Dollar, and New Zealand Dollar. Pressure is being applied to thelower yielding Japanese Yen. This trend is likely to continue as long as U.S. equitymarkets remain firm. Should U.S.stock markets begin to weaken, look for the Dollar to gain against all majorcurrencies before the end of the day.

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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