Start of Bailout Deployment Still Not Enough to Support Euro

Continuing concern over the Euro and worries over theviability of a single currency system is pressuring the EUR USD at themid-session. Earlier in the trading session, the Euro rallied on optimismgenerated by the start of the distribution of financial aid to Greece.

Continuing concern over the Euro and worries over theviability of a single currency system is pressuring the EUR USD at themid-session. Earlier in the trading session, the Euro rallied on optimismgenerated by the start of the distribution of financial aid to Greece.

Technically, the Euro confirmed Monday’s closing pricereversal bottom but the lack of follow-through to the upside and the sharpintraday sell-off put the market in a position to take out yesterday’s low at 1.2233.This action would negate the reversal pattern.

The GBP USD is trading lower but inside of yesterday’srange. The British Pound is falling in sympathy with the Euro and on concernsthat new austere financial measures will pressure the economy. Talk is alsocirculating that the Bank of England will use the poor economy as the reason tobeing buying government bonds once again. This action would put liquidity backinto the financial system thereby pressuring the Sterling.

The weaker Euro is helping to trigger a reversal to theupside in the USD CHF. Earlier in the session this pair confirmed Monday’sclosing price reversal top. Upside momentum indicates that this pattern islikely to be negated by a move through the reversal top at 1.1446.

Falling equity markets are helping to weaken the USD JPY.Traders are selling riskier assets at the mid-session for the safety of thelower yielding Japanese Yen. The trade under 92.41 indicates weakness and apossible break to the next support level at 91.61.

Lower demand for higher risk assets is helping to drive theUSD CAD higher at the mid-session. Yesterday this market stopped at a 50%retracement level at 1.0424. Early Tuesday morning, this pair testedretracement zone support at 1.0273 to 1.0235. The subsequent turnaround andupside momentum indicates that the next rally may drive this pair to 1.0498.

Falling U.S.equity prices are pressuring the AUD USD and NZD USD. This morning’s sell-offhas taken out yesterday’s low. Downside momentum is building which couldtrigger an even further decline to the February bottom at .8577 over thenear-term. The New Zealand Dollar is also trading weaker as the investors sellhigher yielding assets. Although the Kiwi is a little better than the Aussietoday, downside momentum may accelerate which could take this pair to theFebruary low 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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