Euro Pressured by Early Stress Test Results

The Euro is under pressure this morning following reports ofa leak in the release of the European bank stress test data which wasoriginally scheduled to be revealed on Friday. The leaks revealed that Spanishand Greek banks are expected to pass the tests which raised concerns amonginvestors about the stringency of the tests.

The Euro is under pressure this morning following reports ofa leak in the release of the European bank stress test data which wasoriginally scheduled to be revealed on Friday. The leaks revealed that Spanishand Greek banks are expected to pass the tests which raised concerns amonginvestors about the stringency of the tests.

At first the Euro rallied on the news, but selling pressurequickly hit the Euro as investors questioned how rigorous the tests are. Themost pressure hit the Euro following the news that the nationalized Germanlender Hypo Real Estate revealed a possible capital shortfall. Even though itwas just one financial institution, investors turned negative on the Euro.

Technically the Euro is still in an uptrend despite the twoday break. The overnight follow-through to the downside following Tuesday’sclosing price reversal top indicates the possibility of a 2 to 3 day break to1.2775 to 1.2716. So far the current break has not affected the trend andappears to be only a correction.

The U.S. Dollar is trading higher against most majorcurrencies ahead of this afternoon’s testimony by Fed Chairman Ben Bernanke.Before testimony is to begin, investors will have had the chance to react toearnings reports from Morgan Stanley, Wells Fargo and Starbucks.

After earnings are released before the opening this morning,investors will shift their focus to Bernanke’s monetary report to the U.S.Senate Banking Committee. Bernanke is expected to be grilled about the recentbout of weak economic data that could result in the Fed beginning another roundof quantitative easing. Investors will be tuned into the testimony in hopes ofhearing clues about the possibility of a double-dip recession. Last week in itsFOMC minutes, the Fed lowered its forecast for GDP and employment. Bernanke mayattempt to further explain the reasoning behind the Fed’s downward shift in itsoutlook for the economy.

Bernanke is scheduled to speak at 1 p.m. Central time whichgives investors plenty of time to react to this morning’s earnings report.

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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