Euro Breaks Below 1.30 Before Recovering

The EUR USD briefly broke below 1.30 before recovering. Traders pressed the Euro hard overnight as contagion fears continued to spread as peripheral bond spreads widened.

The EUR USD briefly broke below 1.30 before recovering. Traders pressed the Euro hard overnight as contagion fears continued to spread as peripheral bond spreads widened.

The market seems to be struggling with a lack of confidence at this time. Obviously the Ireland bailout failed to ignite the assurance that such a deal would contain the debt crisis. Instead, traders have shifted their focus toward sovereign debt issues in Spain and Italy. Last night the premium investors demand to hold Spanish and Italian bonds over German debt jumped to Euro lifetime highs.

The fear sweeping the market at the moment is that there is no trust that any of these peripheral countries can effectively fund their debt. Further evidence that traders were bailing on the Euro was found in this week’s Commodity Futures Trading Commission Commitment of Traders Report which revealed that investors were net short the Euro for the first time since September 14.

Technically the Euro appears to be headed toward a pair of long-term uptrending Gann angles at 1.2937 and 1.2929. There could be a technical bounce when these angles are tested, but the best sign of a potential bottom and the start of a short-covering rally will be a closing price reversal bottom.

For further information on this and other Forex markets send an email to patternpricetime@yahoo.com

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

Disclainer: