Monday November 8, 2010 - 14:53:43 GMT
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Euro Pressured by Peripheral Debt Concerns
The Euro is down across the board on Monday amid concerns
that peripheral debt problems are resurfacing. Issues began to resurface last
week, culminating on Friday when the 10-year Irish Bond yield stood at record
spread over the comparable German debt and similar Spanish/German yield Gap
rose to its highest since mid-July.
The European Central Bank last week left its benchmark
interest rate unchanged but it also did not reveal any plan to expand its
quantitative easing program unlike its U.S. Federal Reserve counterpart.
ECB President Jean-Claude Trichet offered no insight when he
said during his post-meeting press conference that he could not say if the
easing was over. The resurfacing Irish debt issues indicate that the ECB still
has serious problems to deal with before thinking about implementing a more
accommodative monetary policy.
An unexpected fall in German industrial output also
contributed to the Euroâ€™s weakness overnight. Overnight it was reported that
German industrial output fell by 0.8 percent on the month in September, missing
median guesses for a 0.5 percent increase.
Selling pressure began to hit the Euro on Friday when the U.S. government
reported better-than-expected jobs data. Last week the Fed also announced its
quantitative easing plan. This news was already priced into the EUR USD so
investors are likely going to start putting more emphasis on U.S. economic
Technically the main trend is up on the daily chart so the
current weakness can still be called corrective in nature, triggered by
profit-taking. The two bottoms at 1.3733 and 1.3698 need to be violated before
the trend turns down.
At this time, the market is testing a minor retracement zone
at 1.3990 to 1.3921. This zone is based on the short-term range of 1.3698 to
1.4282. A pair of uptrending Gann angles at 1.3828 and 1.3763 may slow down the
rate of decline and also trigger technical bounces.
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