Euro Weakens after Test of 1.30

Early in the tradingsession the Euro looked strong, having waved off the overnight bearishnesscreated by a downgrade of Irish debt and communication problems between theInternational Monetary Fund and Hungary.

Early in the trading session the Eurolooked strong, having waved off the overnight bearishness created by adowngrade of Irish debt and communication problems between the InternationalMonetary Fund and Hungary.A decline in the U.S. National Homebuilders Association Confidence Index alsotriggered a rally, but traders were unable to take out Friday’s high at 1.3006,prompting a profit-taking break. At the mid-session, the Euro is still positiveon the day, but threatening to turn down.

Technically, Friday’s closing pricereversal top was confirmed overnight, but there was very little follow-throughto the downside. This type of formation usually triggers a 2 to 3 day break ofas much as 50% of the last major swing up. Traders should watch for latesession weakness to reaffirm the reversal top. A trade through 1.3006 willnegate the formation.

The British Pound is under pressure thismorning after British house sellers reported a drop in the average asking priceby 0.6% in July. This added to the bearishness late last week which wastriggered by a weaker economic outlook. Traders may be pricing in thepossibility that the Bank of England will hold interest rates at historicallylow levels.

The daily chart indicates this market maybreak into a Gann angle at 1.5069 before attracting new buyers.