Euro Breaks “Lehman Low”

On Sunday night, the Euro broke through the “Lehman Low” at1.2319 running stops and encouraging fresh selling in the process as the marketdropped to 1.2233. Although there is a slight short-covering rally shortlybefore the New Yorksession, most traders believe this rally will be used to attract more sellingpressure.

On Sunday night, the Euro broke through the “Lehman Low” at1.2319 running stops and encouraging fresh selling in the process as the marketdropped to 1.2233. Although there is a slight short-covering rally shortlybefore the New Yorksession, most traders believe this rally will be used to attract more sellingpressure.

Fundamentally, investors continue to lose confidence in theEuro because of the inactivity by the European Union. Many traders feel thatdespite promising to pump $1 trillion into the economy, the EU waited too longto address the fiscal problems in Greece and are taking too long tomake the funds available for actual use. Continue to look for more downsidepressure, but watch for wicked short-covering rallies because of oversoldconditions.

Uncertainty about the future of the U.K. economy ishelping to pressure the British Pound overnight. Despite the formation of a newgovernment last week, U.K. investors feel that the fiscal changes that musttake place to balance the budget and cut the deficit spending are short-termbearish. Furthermore, investors feel that it is just a matter of time beforethe sovereign debt problems in the Euro Zone become the problems of the U.K.

The USD JPY is holding steady this morning, but could dropsharply lower if U.S.equity markets weaken and demand for lower risk assets increases. Clearlyglobal investors are shedding risk at this time. This is helping to support theJapanese Yen.

The drop in demand for higher risk assets helped drive theUSD CAD higher overnight. The strong rally to the 50% price at 1.0424 completedthe first objective of the closing price reversal bottom formed last week fromthe 1.0110 bottom. Continue to look for more upside in this pair with 1.0498 asthe next objective. The driving force behind the strength will be falling crudeoil, gold and equity prices.

Weak U.S.equity markets overnight helped pressure the AUD USD. The break however stoppedshort of the recent low at .8708. Continue to look for more downside pressureas traders dump risky assets. A sharp break in U.S. equity markets today is likelyto trigger an acceleration to the downside with .8577 an eventual downsidetarget.

The NZD USD is under pressure this morning. After taking outthe recent bottom at .7007, this market found short-term support at a 61.8%price at .7004. A break through this level is likely to trigger a furtherdecline to .6964.

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: