Euro Falls 1%; Sovereign Debt Woes Worry Traders

The EUR USD fell over 1% early in the New York session as fear swept the Forex markets on concerns that Portugal and Spainwould become the next Greece.The Euro was weak from the opening but the break accelerated to the downsideafter videos of unrest in Greecewere broadcast worldwide.

The EUR USD fell over 1% early in the New York session as fear swept the Forex markets on concerns that Portugal and Spainwould become the next Greece.The Euro was weak from the opening but the break accelerated to the downsideafter videos of unrest in Greecewere broadcast worldwide.

Traders were able to witness the clash between Greek policeofficers and workers over financial cuts. As part of the new bailout agreementwith the International Monetary Fund and the European Central Bank, Greece wasrequired to make severe budget cuts in order to qualify for the loans. The Europlunged sharply lower throughout the morning as hedge funds and largespeculators continued to press it lower in the absence of seemingly any bids.

Shortly before the mid-session and after reaching a low of1.2803, oversold conditions and a short-covering rally in the equity marketstriggered a turnaround n the Euro. Although at one point upside momentum lookedas if it was going to produce a closing price reversal bottom, all the marketcould muster was a 50% retracement of the day’s range.

At the mid-session, the GBP USD was trading lower but welloff the bottom. The British Pound traded sharply lower this morning as it fellin sympathy with the Euro. Other than the weakness triggered by the Euro thismorning, the tone in the Sterlingseemed to be a little more upbeat as investors began to factor in thepossibility of a victory by the Conservative Party following the May 6th election.Traders are also beginning to accept the notion that no matter which party winsthe majority of the parliament, austere financial measures will have to beenacted in order to tighten up the U.K. budget and shore up its debtor risk a possible downgrade by the credit rating services.

The fall in the price of gold and crude oil helped drive theUSD CAD sharply higher this morning. After changing the trend to up on thedaily chart on Tuesday following the breakout over the last swing top at1.0215, bullish traders set their sights on the March 26th top at 1.0302.Upside momentum took this price out fairly easily, taking out stops on thepenetration. The rally continued until just before the major 50% level at1.0366. At this point, gold and crude began to rally and weak shorts began totake profits. At the mid-session, the Dollar/CAD is higher for the day but welloff its high.

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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