Wednesday June 9, 2010 - 20:10:44 GMT
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Forex Hound - www.forexhound.com
Euro Still on Pace for Retracement to 1.2164
Stronger demand for higher risk assets and slight optimism
about Euro Zone finances are helping to boost the EUR USD at the mid-session.
Earlier this morning, the Euro reached a high of 1.2072 before comments from
Fed Chairman Bernanke and the results of the Fed Beige book strengthened the
Higher equity and crude oil markets helped drive up demand
for riskier assets. This strength spilled over to the Euro. In addition,
traders were a little more optimistic about the survivability of the Euro after
the European Union finalized its rescue plan. Although sovereign debt issues
remain the major concern, short traders felt it was necessary to pare positions
on this news.
Finally, the Dollar pared losses against the Euro after the
Fedâ€™s Beige book indicated that the economy was improving mainly on rising
consumer spending although new concerns have been raised about the possibility
of a double-dip recession because of Euro Zone problems and the oil spill. The Dollar
reached its bottom against the Euro after Bernanke said the U.S. economy is
strong enough to withstand fiscal tightening by the Fed.
Technically the Euro is still in a downtrend, but the charts
indicate there is room to the upside. Recently hedge funds and large
speculators have been shying away from selling weakness and have been more
comfortable with selling retracements. Watch for renewed selling pressure once
the Euro completes its retracement to 1.2164 to 1.2233.
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