Ireland Debt Worries Put Heat on Euro

The EUR USD continued its slide overnight after breaking a pair of main bottoms on the daily chart at 1.3733 and 1.3698, turning the main trend to down on the daily chart. Overall, the U.S. Dollar is posting modest gains versus most majors.

The EUR USD continued its slide overnight after breaking a pair of main bottoms on the daily chart at 1.3733 and 1.3698, turning the main trend to down on the daily chart. Overall, the U.S. Dollar is posting modest gains versus most majors.

The Euro continued to feel pressure from persistent concerns about Ireland’s fiscal issues and turbulence in sovereign debt markets. Without any major European reports to draw investor attention and the U.S. Veteran’s Day holiday, traders have been watching for news regarding Europe’s peripheral debt issues.

Speculation continues to grow that Ireland may soon have to resort to tapping the European Union/International Monetary Fund stabilization fund established earlier this year as part of the “bailout” agreement.

The telltale sign that trouble may be brewing continues to be the soaring of Irish government bond yields. Yields rose to 8.9% as investors dumped peripheral bonds. The cost of insuring Portuguese, Irish and Spanish debt against default remained high, indicating worries are likely to persist.

Technically, the main trend is now down on the daily chart following a break through two main bottoms at 1.3733 and 1.3698. Based on the main range of 1.2587 to 1.4282, watch for the correction to continue down into a retracement zone at 1.3434 to 1.3234.

Impeding the current correction and possibly slowing down the pace of the break is an uptrending Gann angle at 1.3727. A failure to hold this level will likely trigger a further decline into another Gann angle at 1.3524. There are no major support clusters set up at this time.

On the upside, a downtrending Gann angle from the 1.4282 main top comes in at 1.3882 today. This angle is followed by additional angles at 1.4082 and 1.4182.

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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