Wednesday March 24, 2010 - 18:10:50 GMT
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Euro Falls on Greece, Portugal Woes
The Euro is continuing
to plunge after Fitch downgraded Portugal‚Äôs credit rating. On-going
concerns regarding efforts by Greece to obtain financial aid from
either the European Union or International Monetary Fund and this
latest development with Portugal could worsen if additional credit
rating cuts are applied to Spain, Italy and Ireland. Traders are
reacting as if this situation will spread to other sovereign nations as
the European Union continues to drag its feet amidst the already dire
At the mid-session the U.S. Dollar is higher
across the broad against all major currencies as investors seek
protection from the drop in higher yielding assets. Fear could spread
throughout the markets into the close if support for the Euro continues
to erode. Investors are showing their support for the Dollar by selling
off equities, gold and crude oil overnight. In addition, stops are
being hit as the Dollar Index soared to a new high for the year.
GBP USD is trading sharply lower. The British Pound remains vulnerable
to the downside because of the weakening U.K. economy and the threat of
a ‚Äėhung Parliament‚ÄĚ based on poll survey results ahead of the upcoming
The USD CHF is trading above a 50% level at 1.0703 and
headed toward the .618 retracement level at 1.0749. Talk is circulating
that the Swiss National Bank has been actively intervening to prevent
its currency from rising relative to the Euro. This is raising come
concerns that the SNB will soon be listed as a currency manipulator by
the U.S. Treasury Department.
The USD JPY has broken out of a
triangle formation to the upside. In the process the main trend turned
up on the trade through 91.08. The next challenge for this market is
the late February top at 92.14.
The USD CAD is trading higher
after regaining an old bottom at 1.0205. The current chart formation
suggests impending volatility with a bias to the upside. After
confirming last Friday‚Äôs closing price reversal bottom at 1.0060
earlier in the week, this market appears to be building upside momentum
which could send this market soaring to a major 50% level at 1.0369.
AUD USD is trading lower and beginning to accelerate to the downside.
The current chart pattern suggests that this market has room to break
to the downside with .8914 a potential target over the near-term. A
plunge in U.S. equity markets in reaction to the weakness in the Euro
could send investors scurrying out of higher yielding currencies.
similar situation to the one developing in the Aussie Dollar is taking
place in the NZD USD. Traders seem to be shying away from aggressively
shorting this market and in front of a minor retracement zone at .6992
and .6948. A shift in risk sentiment back toward risk aversion could
pressure the New Zealand Dollar.
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