Euro has Roller-Coaster Day

Thin trading conditions and economic reports ledto a “roller-coaster” type trading session in the Euro on Tuesday.

Thin trading conditions and economic reports led to a“roller-coaster” type trading session in the Euro on Tuesday. The Europeansingle currency rallied on a better than expected German jobs report, topped onstrong U.S. Consumer Confidence data then, after trading sideways throughoutthe mid-session, drifted lower into the close following the release of the Fedminutes.

The Euro gained strength overnight after it was reportedthat Germany’sjobless numbers fell less than economist estimates. The market reacted as ifthe number was bullish instead of just slightly lower than the pre-reportguess. Technically the Euro found support last night slightly in front of lastweek’s bottom at 1.2587. It rallied whenU.S.stocks opened higher and sentiment shifted toward risk.

At 9 am CDT the Euro topped following a better than expectedConsumer Confidence Report. The actual number of 53.5 blew out the consensusfigure of 50.0. The surprise nature of this number drove investors back intothe Dollar. At this point the Euro broke from 1.2742 to 1.2680 before settlinginto a trading range.

After a quick rally to 1.2701, the EUR USD began to breakfollowing the release of the Fed’s Minutes from its last FOMC meeting. Thismarket broke hard into 1.2661 as the report indicated the Fed is ready to takeappropriate action should the U.S.economy deteriorate “appreciably”. The willingness of the Fed to considertaking additional steps to provide more support if the economy weakens furtherdrove traders into the safety of the lower-yielding currencies, thus weakeningthe Euro.

Technically the Euro is in a downtrend, but the recentsideways action has this market poised to move sharply in either direction. Abreak to the downside is likely to run stops under the last swing bottom at1.2587 all the way to the Fibonacci level at 1.2433.

A breakout over 1.2779 will change the main trend to up andcould ignite the start of a rally to 1.2960.