Tuesday October 5, 2010 - 18:30:47 GMT
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Forex Hound - www.forexhound.com
Euro Surges despite Better U.S. ISM Report
The Euro is surging at the mid-session
despite the release of a better-than-expected U.S. economic survey. The surprise
decision by the Bank of Japan to ease monetary policy further is also
contributing to the rally because it almost solidifies the case for further
quantitative easing by the U.S. Federal Reserve.
Traders for the most part ignored this
morningâ€™s better U.S. ISM services report because they feel that other sectors
of the economy are still weak and need stimulus from the Fed. Investors also discounted
recent reports of additional sovereign debt problems in the Euro Region.
With one central bank actually easing and
another strongly considering easing, the Euro looks like a stronger currency
since the European Central Bank is not considering any change in its current
monetary policy at this time.
Technically, todayâ€™s EUR USD rally negated
Mondayâ€™s closing price reversal top which was confirmed overnight but failed.
Yesterday I had warned that the reversal pattern could indicate a short-term
top but did not mean a change in trend was taking place.
The chart indicates that the major .618
retracement level at 1.3896 is still the main upside target.
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