Monday July 26, 2010 - 20:52:27 GMT
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Forex Hound - www.forexhound.com
U.S. Housing Report Helps Euro Extend Earlier Gains
Despite questions about how the European bank stress tests
were conducted, investors seemed satisfied enough with the results early this
morning to underpin the Euro while waiting for fresh news regarding the U.S. housing
Following the release of U.S. new home sales data which saw
an increase in June by more than economists had forecast, the Euro rallied and
is now pressing a minor .618 retracement level at 1.2998. This puts this pair
in a position to challenge last weekâ€™s high at 1.3028.
Stocks extended their gains following the housing report,
driving up demand for higher risk assets, helping the Euro maintain the upward
momentum which helped drive the market higher late last week.
The British Pound is higher this morning but momentum slowed
when the market neared a weekly swing top at 1.5523. A breakout over this level
will turn the main trend up and set up a possible acceleration to a major 50%
retracement level at 1.5635.
Fundamentally the Sterling
is being driven higher by last weekâ€™s release of better than expected second
quarter GDP. Last weekâ€™s news that the U.K. economy expanded by a strong
1.1 percent was a sign the economy was more stable than previously estimated.
This news led some investors to believe that the Bank of England will have to
seriously consider raising its benchmark interest rate sooner than expected.
As the Pound approaches a key retracement level at 1.5635,
investors have to realize that the second quarter expansion took place before
the government implemented its proposed deep spending cuts and tax hikes. The
biggest fear amongst bullish traders is that the governmentâ€™s proposed
austerity measures will curtail the gains that the economy is currently
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