Euro Breaks Through Major Fibonacci Level at 1.3896

The U.S. Dollar is trading lower againstall major currencies in reaction to this morning’s disappointing U.S. ADPemployment report. Traders were banking on a figure of +20,000 but were handed-39,000.

The U.S. Dollar is trading lower againstall major currencies in reaction to this morning’s disappointing U.S. ADPemployment report. Traders were banking on a figure of +20,000 but were handed-39,000.

With the number on the wrong side of thezero, traders sold off the Greenback in anticipation of a weak U.S. Non-FarmPayrolls number on Friday. The disappointing, but not surprising number alsosolidified trader conviction that the Fed will add additional liquidity to themarket in order to stimulate the economy.

No one expected a “big” number since theeconomy only grew at 1.6% according to the latest GDP report, but today’sreport showed that employers aren’t necessarily firing, but they certainly aren’thiring. This morning’s report could be a sign that employment is beginning acontraction.

Forex Quickies

The Euro broke out to the upside throughthe Fibonacci target at 1.3896. Let’s see if it can sustain the rally byestablishing support above this level. A close back under the .618 line couldbe the start of a short-term profit-taking break ahead of tomorrow’s EuropeanCentral Bank policy meeting.

The rally in the British Pound helpedestablish a new higher bottom at 1.5669. The rally, however, appears to beslowing in front of the August top at 1.5997. Trading is light today because ofThursday’s central bank meeting. Investors are looking for the Bank of Englandto talk about additional quantitative easing through its asset buyback program.

The USD CHF is down this morning as theU.S. Dollar continues to lose its glitter as the global reserve currency. Themain trend is down. A new main top was formed at .9843. A move through thisprice will turn the main trend to up.

The USD JPY broke the “interventionbottom”. Traders are approaching the market with caution at current levels inanticipation of another round of intervention by the Bank of Japan. So farthere has been no sign of central bank activity. The last intervention took place during theJapanese trading session.

The USD CAD dropped sharply early in thesession but is now trading off its low. The weaker equity market as well as theintraday break in crude oil off its high is giving long traders an excuse totake profits. The weaker Dollar, stronger Euro is expected to help limit thebreak.

The Australian Dollar took out yesterday’shigh while slowing working its way toward the July 2008 top at .9849. The break in the U.S. equity markets has had alimited effect on the Aussie. It’s going to take a hard break in the stockmarket to trigger a profit-taking break. The weak U.S. economy is the main catalystbehind the Aussie Dollar’s strength.

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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