Euro Traders Still Mulling Possible ECB Rate Hike

The Euro is tradinga little lower versus the U.S. Dollar this morning. Indecision seems to be thetheme as traders mull over whether the EuropeanCentral Bank has enough economic data to support an interest rate hike asearly as next week. The lack of clarity and conviction from the ECB is helpingto keep bullish traders on the sidelines at this time.

The Euro is tradinga little lower versus the U.S. Dollar this morning. Indecision seems to be thetheme as traders mull over whether the EuropeanCentral Bank has enough economic data to support an interest rate hike asearly as next week. The lack of clarity and conviction from the ECB is helpingto keep bullish traders on the sidelines at this time.

Support also seemsto be building a little for the Greenback. Traders are trying to assess whetherthe Fed has seen enough economic growth to prematurely end its quantitativeeasing program currently scheduled to finish in June. Although the recent risein oil prices was a major concern because of the possibility it would derailthe recovery, many economists agree that the price of a barrel of oil neverrose over the critical $140 price which probably would’ve ignited the start ofa double-dip recession.

Technically, theEuro is still seeing a slight bias to the downside following last week’s closingprice reversal top. Based on the last rally from 1.3752 to 1.4248, tradershad been expecting a break into a retracement zone at 1.4000 to 1.3941. Buyers,however, have been stepping in ahead of this zone, curtailing selling activity.

In addition to theretracement zone, a pair of strong uptrendingGann angles at 1.4048 and 1.3993 has been attracting fresh buying. Theseangles can also be used as a trend indicator. A break through both of theseangles could signal the start of an acceleration to the downside.

Monday’s minor reversalbottom could trigger a short-term retracement to 1.4134 to 1.4161. It is inthis zone that traders will have to decide whether to take the Euro higher orform a potentially bearish secondarylow top. With the ECB meeting next week, it looks as if traders may becontent with holding this single currency in a range until more concrete newsabout interest rates is released.

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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