Tuesday September 28, 2010 - 00:42:04 GMT
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Euro Posts Reversal Top after Irish Bank Downgrade
The EUR USD posted a closing price reversal top on Monday
after Moodyâ€™s Investors Service said it cut Anglo Irish Bankâ€™s unguaranteed
senior debt to Baa3 from A3, and cut its dated subordinated debt to Caa1 from
The chart pattern suggests a possible top, but the pace of
the break from the top may be hindered by lingering concerns that the U.S.
Federal Reserve will engage in quantitative easing.
Technically, I had been anticipating a possible top or at
the least a technical bounce once the Euro reached the 50% price level of the main
1.1876 to 1.5144 range at 1.3510. The current rally reached 1.3507 before
sellers stepped in.
If confirmed by at break through 1.3424, the Euro may begin
a correction back to 50% of the 1.2644 to 1.3507 range. This price is 1.3075.
The technical pattern is clear, but in order for this to
come to fruition, it needs the cooperation of a couple of fundamental factors.
Sovereign debt concerns are likely to be a bearish driving force, but this news
could be negated by bullish economic news from the Euro Zone or more bearish
economic news from the U.S.
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