Euro Posts Strong Weekly Gain

The Dollar finished mixed on Friday but for the week lostground to most major currencies. Short-covering rallies in the foreigncurrencies combined with weak U.S.economic reports proved to be too much for the Greenback this week. Theweakness in the Dollar this week did not come as a surprise, however, havingbeen set up by last week’s closing price reversal bottom.

The Dollar finished mixed on Friday but for the week lostground to most major currencies. Short-covering rallies in the foreigncurrencies combined with weak U.S.economic reports proved to be too much for the Greenback this week. Theweakness in the Dollar this week did not come as a surprise, however, havingbeen set up by last week’s closing price reversal bottom.

The Euro finished the week with its strongest gain againstthe Dollar since September 2009. The action on Friday was light due to the lackof fresh economic news. An overnight rally stopped short of taking out theprevious main top at 1.2453 and turning the main trend up. The secondary rallyto 1.2394 during the New Yorksession also fell short of the top. For the most part, traders seemed to becontent with the gains for the week and were more interested in protecting thedownside.

Following last week’s closing price reversal bottom, the EURUSD rallied sharply higher boosted mainly by short-covering. Earlier in theweek, another sovereign debt scare from Spain put pressure on the Euro, butthe market reversed itself when a Spanish bond auction attracted very strongbuying interest.

The weekly chart indicates there is room to the upside to1.2784, but the previous tops at 1.2453 and 1.2671 could mean the effort toreach this 50% level will be labored. The rally from the 1.1876 bottom is nowin its 9th day leaving analysts to wonder if real buying is drivingthe Euro higher or the lack of bearish news.

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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