Friday April 23, 2010 - 19:32:41 GMT
Share This Story
Forex Hound - www.forexhound.com
Short-Covering Rally Continues in Euro
The Euro continued its short covering rally at the
mid-session following the surprise announcement overnight that Greece
going to ask the EU and IMF to release the funds they pledged two weeks
help the Greek government shore up its budget deficit.
Although the financial problems in the Euro Zone are
expected to persist for quite some time and may even spread to other member
countries while the EU and IMF decide how they are going to help provide the
needed aid, shorts have decided to cover with a vengeance today. No serious damage has been done to the Euroâ€™s
downtrend and any rally is likely to be sold again because no base has been
built to support a rally at this time.
Most long-term investors feel that the rescue process is
going to take a long time; meanwhile financial problems are expected to spread
to Spain, Portugal and Ireland. This would mean that not
only will the new rescue plan cover Greece, but it will have to include
the aforementioned nations. At this time the credibility of the Euro and the
European Union are at stake.
The British Pound is under pressure at the mid-session. The
unwinding of short Euro/Long British Pound spreads is helping to pressure the Sterling. In addition,
investors are still nervous that the U.K. economy faces the same fate as
the Greek economy if it doesnâ€™t shore up its budget deficit. Traders are also
nervous that the upcoming election may result in a hung parliament which could
thwart the efforts of the government to establish a plan to fix the U.K.â€™s fiscal
After surging to the upside, the USD CHF has turned
negative. The rising Euro is helping to pressure the Dollar/Swiss as this move
lessens the chances of an intervention by the Swiss National Bank. The SNB may
act, however, if volatility gets to high.
The strong surge in U.S. equity markets is helping to
drive the USD JPY sharply higher. Because of the Euro move and the possibility
may get the much needed financial aid it needs, traders have taken risk
concerns off the table and are putting funds in higher yielding assets. Traders
are borrowing the Yen to invest in the higher yielding U.S. Dollar.
Oversold conditions are helping to contribute to the rise in
the USD CAD. Traders for the most part are ignoring the rise in equities, gold
and crude oil. Wednesdayâ€™s closing price reversal bottom has been confirmed.
The chart pattern suggests the next upside objective is 1.0072 to 1.0106. This
is most likely a short-term rally. Earlier this week, the Bank of Canada said
it would begin raising rates sooner than previously expected.
The AUD USD is trading lower but mounting a small comeback
into the mid-session. A downtrend is developing in the Aussie currency because
investors are unsure of the Reserve Bank of Australiaâ€™s next move because of
mixed economic data. Traders may also be gearing up for a possible revaluation
of the Chinese Yuan which is supposed to be bearish for Australian exports.
The NZD USD is trading better at the mid-session. The weaker Aussie is encouraging traders to
unwind long Aussie/short Kiwi spreads. Traders also feel that the Reserve Bank
of New Zealand
is next in line for an interest rate hike since the Australian central bank has
been hiking rates for several months and the Bank of Canada is pledging a rate
hike in June. Technically, this market found support on an uptrending Gann
angle at .7080. A close over .7124 will be a sign of strength. A huge breakout
over .7199 is likely if upside momentum continues.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."