Euro Weakness Suppresses Risk Appetite

Thin trading conditions ahead of the U.S. Non-Farm PayrollsReport on Friday and less than stellar economic news from the Euro Zone ishelping to weaken the Euro at the mid-session.

Thin trading conditions ahead of the U.S. Non-Farm PayrollsReport on Friday and less than stellar economic news from the Euro Zone ishelping to weaken the Euro at the mid-session.

While risk appetite appeared to be returning to the marketson Wednesday because of better than expected U.S. housing data, this idea wasdampened on Thursday after the Euro Zone reported an unexpected drop in retailsales in April. There was an upward revision to the May Purchasing Manager’sIndex but that wasn’t enough to level off the market. Analysts now believe thatbased on the data, the next recovery is going to be triggered by renewedinvestment or net trade rather than by consumer spending.

Technically, the Euro is in a downtrend but trading insideof a short-term range of 1.2453 to 1.2110. Downside momentum is building whichcould drive this market through the low-end of the range, which could trigger asharp break.

Early this morning the USD JPY surged to the upside.Investors were still reacting to the resignation of the prime minister and tothe possibility of a slow down in the economy. Increased risk appetite was alsoputting pressure on demand for lower yielding assets. The mid-sessionturnaround in the stock market after early morning strength is helping toweaken the USD JPY.

Technically, the Dollar/Yen is trading higher but well offits high. The break back under the .618 retracement level at 92.41 indicatesprofit-taking. This could be a sign that the market is getting ready to settleinto a range between 91.61 to 92.41.

Weakening crude oil and falling equities is helping tounderpin the USD CAD. The main trend on the daily chart turned down onWednesday, but there was very little follow-through to the downside this morning.At this time the market is trading inside of a retracement zone at 1.0394 to1.0481 and is likely to stay there until the release of the U.S. employmentnumbers on Friday.

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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