Euro Pressured as Investors Shed Risky Assets

The U.S.Dollar’s trend turned up against most major currencies after European debtworries triggered the shedding of risky assets. Risk aversion was back on thetable after a spike in Portuguese bond yields led to liquidation in the Euro.

The U.S.Dollar’s trend turned up against most major currencies after European debtworries triggered the shedding of risky assets. Risk aversion was back on thetable after a spike in Portuguese bond yields led to liquidation in the Euro.

Furtherfueling the weakness in the Euro and commodity-linked currencies is thepolitical situation in Egypt.News that Egyptian President Hosni Mubarak will transfer power following anelection later this year disappointed the protesters, leaving the entiresituation unsettled. What started out as a paring of risky assets now appearsto be leading to more of a corrective mode especially in the Euro.

The Eurotopped last week after it reached a key technical level but the sellingpressure actually started after the European Central Bank failed to acknowledgeinflation in its recent policy statement. This disappointed bullish investorswho had built in a bias toward at least two rate hikes later this year.

Technicallythe main trend on the daily chart turned down earlier this week, but it took acouple of days of retracement to set up the secondary lower top at 1.3744.Downside momentum seems to be building which is likely to drive the Eurothrough the recent swing bottom at 1.3507. This move is likely to trigger anacceleration to the downside.

Thenear-term target zone is 1.3367 to 1.3250. An uptrending Gann angle at 1.3353forms a support cluster with 1.3367 but this area is not likely to be testedtoday if volatility remains normal. Downtrending Gann angle resistance is at1.3581 today.

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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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