The EUR USD is trading low and giving back someof yesterday’s gains after it was reported that the ZEW indicator of Germaneconomic sentiment fell sharply in September to -4.3 from 14 in August.
The EUR USD is trading low and giving back some ofyesterday’s gains after it was reported that the ZEW indicator of Germaneconomic sentiment fell sharply in September to -4.3 from 14 in August.Pre-report economist guesses were for a drop in the index to 9.0.
Despite the overnight weakness, the main uptrend does notappear to be threatened. Traders are basically using the report to parepositions after yesterday’s sharp move to the upside. Although the reportshowed economic sentiment had dropped more than expected, the odds remain lowat Europe will experience a double-diprecession.
Technically, the Euro is likely to find support following apullback into a retracement zone at 1.2793 – 1.2754. The charts still indicatea resistance cluster and potential upside target at 1.3049 by September 16.
Overnight the U.S. Dollar reached a new 15-year low versusthe Japanese Yen on uncertainty regarding a leadership election in Japan. At issuewas whether the current Prime Minister Kan would keep his job or not. Kan has been a staunchsupporter of intervention. When it was all over, Kan was able to keep his job, but theDecember Japanese Yen has barely backed down from its overnight high at 1.2048.
The inability to break the Japanese Yen shows a lack ofconfidence in the government and the Bank of Japan’s ability to pull off asuccessful intervention. By taking the Yen to a new high, investors are sayingthe country’s leaders lack the clarity and conviction to weaken the currency.
The Dollar is trading better against most majors with theexception of the Japanese Yen, indicating that traders may take risk off thetable today after yesterday’s strong demand for risky assets driven rally.