U.S. GDP Higher, but Misses Estimate; Overbought Conditions May Pressure Euro

The Eurowas trading inside of Thursday’s range as traders waited for the release of theU.S.4Q GDP number. Upon the release of the report, the Euro had a violent,two-directional move before settling near the center of the overnight range.

The Eurowas trading inside of Thursday’s range as traders waited for the release of theU.S.4Q GDP number. Upon the release of the report, the Euro had a violent,two-directional move before settling near the center of the overnight range.

Thismorning’s report showed that the economy grew at a solid 3.2 percent annualrate on top of the 2.6 percent pace in the third quarter. Although 4Q GDP rose,it still fell short of pre-report estimates of a 3.5 percent increase. The gainand the miss was the reason for the volatility this morning.

The Eurohas been trending higher for fourteen days since bottoming at 1.2873.Yesterday, the single-currency tested a major .618 level at 1.3744 beforebacking off. Today’s inside day could be indicating a slight shift in sentimentwith a 50% level at 1.3577 a possible target over the near-term. A breakthrough this level will indicate a more serious retracement is developing.

Today’s GDPshould be considered old news and its effects on the performance of the Dollarshould be short-lived. The main focus remains high unemployment and theexpanding budget deficit. Both of these factors combined with a rosier outlookfor the Euro Zone is likely to keep upward pressure on the Euro.

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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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