Stronger U.S. Economy One Factor Pressuring Euro

Fundamentallyand technically related pressure continues to mount on the Euro this morning.Technically the main trend is down on the daily chart. With downside momentumbeginning to pick up, a support cluster target zone has been identified todayat 1.3373 – 1.3367.

Fundamentallyand technically related pressure continues to mount on the Euro this morning.Technically the main trend is down on the daily chart. With downside momentumbeginning to pick up, a support cluster target zone has been identified todayat 1.3373 – 1.3367.

Fundamentally,European finance ministers are finally preparing to attack the lingeringproblem of regional sovereign debt. The officials are expected to develop acomprehensive plan which addresses the Euro’s vulnerabilities by strengtheningthe European Financial Stability Facility, a rescue fund created in response tothe debt crisis. The key issues to be decided have to do with improving thecapacity of the fund and the widening of the scope of its activities.

In additionto the lingering sovereign debt issues, the Euro is also trading lower becauseof the recent strength in the U.S.economy. Sure unemployment is still an issue, but the other numbers are showingenough growth to encourage traders to begin pricing in an expected rate hike byJanuary 2012.

Treasuryyields have been rising for several months which are also supporting theDollar. This week traders will get another chance to push rates higherfollowing the release of U.S. Retail Sales and Consumer Price data. Strongreports will mean additional support for the Greenback.

Gettingback to the technical factors, today’s target may be 1.3373 to 1.3367, however,based on the main range of 1.2873 to 1.3861, the forecasted target zone isactually 1.3367 to 1.3250. From the swing chart perspective, the last break onthe daily chart was .0354 in 3 days. Today is 3 days down from the 1.3744 swingtop, making 1.3390 a potential target.

Short-tradersshould keep in mind that a test of the support cluster may trigger aprofit-taking short-covering rally. Counter-trend traders may consider thisarea a fresh entry point if an exit can be identified. Rather than sellingweakness, trend traders may choose to wait for a retracement following a testof this support zone.

For furtherinformation on this and other Pattern, Price & Time products visit ourwebsite at www.patternpricetime.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

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