Shift in Risk Sentiment Could Drive Euro to 1.2153

Appetite for risk is helping to drive the U.S. Dollar lowerahead of the New Yorktrading session. Firm trading action overnight in the global equity marketsdrove up demand for higher risk currencies leading to this morning’s call for ahigher opening.

Appetite for risk is helping to drive the U.S. Dollar lowerahead of the New Yorktrading session. Firm trading action overnight in the global equity marketsdrove up demand for higher risk currencies leading to this morning’s call for ahigher opening.

There seems to be a shift in market sentiment taking placethat is centering on the Euro. With Bernanke supporting the actions by theEuropean Union and the EU continuing to develop measures to support the Euroand back the struggling nations, watch for the start of a short-covering rally.A rally in the Euro should take some of the pressure off the commodity-linkedcurrencies which have been beaten up lately because of trader aversion to risk.

The Euro is trading slightly better this morning while theBritish Pound is recovering most of yesterday’s losses. Commodity-linkedcurrencies are trading higher in the Pacific Rim,but the Canadian Dollar is under pressure.

The EUR USD briefly pierced the 1.20 area on Tuesday but wasunable to attract fresh selling or trigger sell stops. In addition to theausterity measures being proposed by the European Union, the Euro was stillfinding support from comments by Fed Chairman Bernanke on Monday who said theEU has the means to stabilize the Euro and enough money to support strugglingnations.

The daily chart indicates that the old bottoms at 1.2143 and1.2153 are a wall of resistance. Overcoming these levels could trigger anacceleration to the upside.

News that China’sexports were up as well as new loans is helping to underpin the AustralianDollar. Traders are supporting the New Zealand Dollar in anticipation of aninterest rate hike by the Reserve Bank of New Zealand. Investors feel thatthe RBNZ is poised to initiate a tighter monetary policy like the Reserve Bankof Australiaand the Bank of Canada because of signs the economy is recovering.

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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