Tuesday May 18, 2010 - 20:43:33 GMT
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Forex Hound - www.forexhound.com
Start of Bailout Deployment Still Not Enough to Support Euro
Continuing concern over the Euro and worries over the
viability of a single currency system is pressuring the EUR USD at the
mid-session. Earlier in the trading session, the Euro rallied on optimism
generated by the start of the distribution of financial aid to Greece.
Technically, the Euro confirmed Mondayâ€™s closing price
reversal bottom but the lack of follow-through to the upside and the sharp
intraday sell-off put the market in a position to take out yesterdayâ€™s low at 1.2233.
This action would negate the reversal pattern.
The GBP USD is trading lower but inside of yesterdayâ€™s
range. The British Pound is falling in sympathy with the Euro and on concerns
that new austere financial measures will pressure the economy. Talk is also
circulating that the Bank of England will use the poor economy as the reason to
being buying government bonds once again. This action would put liquidity back
into the financial system thereby pressuring the Sterling.
The weaker Euro is helping to trigger a reversal to the
upside in the USD CHF. Earlier in the session this pair confirmed Mondayâ€™s
closing price reversal top. Upside momentum indicates that this pattern is
likely to be negated by a move through the reversal top at 1.1446.
Falling equity markets are helping to weaken the USD JPY.
Traders are selling riskier assets at the mid-session for the safety of the
lower yielding Japanese Yen. The trade under 92.41 indicates weakness and a
possible break to the next support level at 91.61.
Lower demand for higher risk assets is helping to drive the
USD CAD higher at the mid-session. Yesterday this market stopped at a 50%
retracement level at 1.0424. Early Tuesday morning, this pair tested
retracement zone support at 1.0273 to 1.0235. The subsequent turnaround and
upside momentum indicates that the next rally may drive this pair to 1.0498.
equity prices are pressuring the AUD USD and NZD USD. This morningâ€™s sell-off
has taken out yesterdayâ€™s low. Downside momentum is building which could
trigger an even further decline to the February bottom at .8577 over the
near-term. The New Zealand Dollar is also trading weaker as the investors sell
higher yielding assets. Although the Kiwi is a little better than the Aussie
today, downside momentum may accelerate which could take this pair to the
February low at .6806.
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