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EUR USD dragged Down by Greece's Debt Woes

James Hyerczyk from ForexHound.com at 01/19/10


The EUR USD is taking a beating at the mid-session. This latest round of weakness is being triggered by mounting concerns about Greece’s ability to resolve its debt issues.

Traders expect the European finance ministers to hold their ground and maintain that Greece solves its own problems. This could be an indication that this problem will persist as Greece is having problems reaching a budget solution.

Additional selling pressure is coming from the news that German investor confidence declined more than expected. Speculators pricing in the possibility the Euro Zone economy may be stalling. This report could be proof that the Euro Zone recovery is falling behind the other major economies.

The GBP USD is trading higher and in the mid-range of a key retracement zone at 1.6478 to 1.6355. Early in the trading session, the British Pound soared to the upside on the news that Kraft was about to acquire Cadbury PLC. The news of the acquisition originally drew bids from British Pound traders who helped maintain its early upside bias. The violation of key technical resistance levels also helped to send the market higher.

Higher than expected consumer inflation helped drive the British Pound lower after an initial spike following the release of the report. Today’s report showed that inflation had accelerated at a record pace. It also served as proof that the Bank of England stimulus plan is working, and that there is no need for further stimulus measures. The BoE stimulus activity did its job but stopping the threat of inflation, but has helped put inflation back on the agenda.

Throughout today’s session, the GBP USD has been trading sideways, but with slight upward bias. Watch for weakness to develop under 1.6355. A lower close will form a daily closing price reversal top which could set up a possible correction to 1.6175 over the near-term.

The USD JPY is trading higher at the mid-session. The chart indicates that this market may test a downtrending Gann angle at 92.02. A 50% retracement price comes in at 92.04. This helps form a resistance cluster at 92.02 to 92.04.

The new main range in the USD CHF is 1.0507 to 1.0130. At the mid-session, this market is trading inside the retracement zone of this range at 1.0318 to 1.0363. The chart indicates that the next upside target is downtrending Gann angle resistance at 1.0402. An uptrending Gann angle at 1.0250 is the best support.

The USD CAD continues to build a support base above the Oct. 15, 2009 bottom at 1.0205. At the mid-session, this market is showing a sign of strength by piercing a downtrending Gann angle at 1.0325. Holding above this price could trigger a further rally to a key retracement zone at 1.0484 to 1.0546.

The recent downward bias in the AUD USD has helped to form a new range at .8734 to .9329. Based on this range, look for a possible retracement to .9031 to .8961 over the near-term. Up trending Gann angle support at .9074 will be the first downside target. On the upside, .9269 is short-term resistance. This market was trading weaker overnight until U.S. equity markets rose. This helped to trigger a short-covering rally because of increased demand for higher risk.

The new main range in the NZD USD is .6970 to .7442. The next retracement target is .7206 to .7150. The chart pattern suggests a break to this zone is likely, but this market has to get through uptrending Gann angle support at .7310 first. Stronger demand for higher risk assets triggered a short-covering rally early in the session.

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