Euro Gaps Higher after EU unveils Greece Bailout Plan
The Euro gapped higher against the Dollar after European
nations unveiled their plan to bailout debt-ridden Greece. The surge in the EUR USD
helped initially to drive up demand for higher yielding currencies while
putting pressure on the Japanese Yen.
The Greek rescue package of loans was pegged at as much as
40 billion Euros. The details of the plan reveal that this amount is expected
to be treated as a line of credit that Greece can tap as it deems necessary.
This plan includes the support of the International Monetary Fund which makes
it similar to the plan revealed last month.
After taking austere measures to shore up its finances, Greece has been
suffering through severe financial problems as the country tries to adjust to a
different way of conducting business. Recently it tried to tap the capital
markets for financing, but that proved to be a near-disaster as interest rates
soared, driving down bond prices while pushing up the cost of servicing the
Shorts covered on the opening, driving the Euro higher but
many traders agree that Greece
is not out of the woods yet which means another wave of selling pressure could
start as early as Tuesday. On April 13th, Greek will auction Treasury Bills. A
failure to trigger demand for these financial instruments could force Greece to tap
the funds available through the loan package. This action is likely to push the
Euros down once again as traders will see this as a sign that Greece is going
to be at the lending window often during this so-called recovery phase.
Technically, the Euro turned the main trend higher on the
breakout over 1.3591. The Euro opened at 1.3659 then rallied to 1.3691. Since
reaching its peak, the Euro has been under pressure. Shortly before the New York session, it is
falling back into a retracement zone at 1.3607 to 1.3542. Traders could try to
establish support at the old main top at 1.3591 or try to fill the gap, all the
way down to 1.3498.
The lack of major economic reports today mean GBP USD
traders will be focusing more on the developments in the Euro. Last night, the
British Pound gapped slightly higher in reaction to the news of the Greece bailout
package. After penetrating a .618 level at 1.5419, this market has fallen back
below this level. The charts indicate that there may be a pull-back to 1.5297
The USD CHF plunged overnight as the Euro soared. The market
is currently trading inside of a short-term range of 1.0434 to 1.0785.
Overnight the market stalled inside a retracement zone at 1.0610 to 1.0568.
Looking at the bigger picture, this market is trading inside of a major
triangle formation with 1.0717 the upside target and 1.0455 the downside
The Dollar is gaining on the Japanese Yen as Greeceâ€™s bailout
proposal has driven up demand for higher risk assets. The short-term range is
94.77 to 92.83 with makes 93.80 to 94.03 the next potential upside target.
Downtrending Gann angle resistance is 93.52. Taking out this level could drive
the Dollar/Yen to 94.15 over the near-term.If U.S.
equity markets begin to sell-off, then look for a resumption of the break back
The USD CAD is trading higher despite higher crude oil and
gold.Late last week, this pair stopped
at .9975 and formed a closing price reversal bottom. Based on the short-term
range of 1.0302 to .9975, traders should look for a possible rally to 1.0138 to
1.0177. Fundamentally, Friday it was revealed that Canadian employment fell
short of the pre-report forecast. This encouraged weaker shorts to lighten up
their positions. Watch for this pair to strengthen once 1.0082 is taken out.
After surging to a 5-month high on increased demand for
higher yielding assets, the AUD USD reversed course, erasing all of its earlier
gains following a government report which showed the housing market may weaken.
Traders began selling the Aussie after it was reported that home-loan approvals
fell more than economists forecast. Technically, the Australian Dollar is in a
position to post a closing price reversal top. Based on the short-term range of
.9001 to .9387, traders should look for a possible short-term retracement to
.9194 to .9184.
The reversal in the Aussie Dollar helped pressure the NZD
USD. Technically, the Kiwi began to attract selling pressure as it approached a
.618 retracement level at .7199.The
actual top came in at .7193. Shortly before the opening, this pair is testing a
50% level at .7125. It looks as if this pair will take its direction from the
Australian Dollar today.
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