Regaining “Lehman Low” could Trigger Euro Short-Covering

Traders continue to keep pressure on the Euro. The lack ofconfidence in the European Union continues to remain the major reason behindthe selling. Investors want clarity not just ideas from the EU. Although theEuro is trading off its low, hedge funds and large traders remain in control ofthe short side. Regaining the “Lehman Low” at 1.2329 could trigger ashort-covering rally late in the session.

Traders continue to keep pressure on the Euro. The lack ofconfidence in the European Union continues to remain the major reason behindthe selling. Investors want clarity not just ideas from the EU. Although theEuro is trading off its low, hedge funds and large traders remain in control ofthe short side. Regaining the “Lehman Low” at 1.2329 could trigger ashort-covering rally late in the session.

The USD CHF is trading higher. The divestment out of theEuro is putting strong appreciation pressure on the Swiss Franc. The SwissNational Bank fears that continuous selling pressure will hurt price stabilityand put the Swiss economy at risk. The main concern is damage to the exportmarket will stall the economy. SNB President promised to act in a decisivemanner which could mean another round of interventions.

The British Pound remains under pressure. Talk iscirculating that the previous government pushed through spending measures whichwill make the new government’s attempts to cut the U.K. deficit and balance the budgetmore difficult. Pressure is likely to remain on the GBP USD as the newgovernment is likely to propose severe budget cuts and tax increases whichcould put a strain on the economy.

The weaker stock market is helping to pressure the USD JPY. Tradershave been dumping risky equity plays all day driving investors into the safetyof the lower yielding Japanese Yen.

The USD CAD rallied this morning but ran into resistance ata 50% price level at 1.0424. The bounce off this level is expected to betemporary. Lower equity prices, crude oil and perhaps gold could put morepressure on the Canadian Dollar which will lead to a further rally in theDollar/CAD to 1.0498 over the near-term.

Falling demand for the higher yielding AUD USD and NZD USDis helping to push both of these currency pairs lower. The weak U.S.equity market is exerting the most pressure on the Aussie and Kiwi. Downsidemomentum could drive this market to .8577 over the short-run. The New ZealandDollar took out a series of old bottoms and now appears to have its sight seton a test of the February bottom at .6806.

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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