Euro Still on Pace for Retracement to 1.2164

Stronger demand for higher risk assets and slight optimismabout Euro Zone finances are helping to boost the EUR USD at the mid-session.Earlier this morning, the Euro reached a high of 1.2072 before comments fromFed Chairman Bernanke and the results of the Fed Beige book strengthened theDollar.

Stronger demand for higher risk assets and slight optimismabout Euro Zone finances are helping to boost the EUR USD at the mid-session.Earlier this morning, the Euro reached a high of 1.2072 before comments fromFed Chairman Bernanke and the results of the Fed Beige book strengthened theDollar.

Higher equity and crude oil markets helped drive up demandfor riskier assets. This strength spilled over to the Euro. In addition,traders were a little more optimistic about the survivability of the Euro afterthe European Union finalized its rescue plan. Although sovereign debt issuesremain the major concern, short traders felt it was necessary to pare positionson this news.

Finally, the Dollar pared losses against the Euro after theFed’s Beige book indicated that the economy was improving mainly on risingconsumer spending although new concerns have been raised about the possibilityof a double-dip recession because of Euro Zone problems and the oil spill. The Dollarreached its bottom against the Euro after Bernanke said the U.S. economy isstrong enough to withstand fiscal tightening by the Fed.

Technically the Euro is still in a downtrend, but the chartsindicate there is room to the upside. Recently hedge funds and largespeculators have been shying away from selling weakness and have been morecomfortable with selling retracements. Watch for renewed selling pressure oncethe Euro completes its retracement to 1.2164 to 1.2233.

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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