Euro Changes Trend to Up; Set−up for Rally to 1.2960
International Trading
THE TECHNIQUE OF GIVING A GOOD MASSAGE
14 years ago
Wednesday, September 1, 2010
, Posted by Usman Ali Minhas at 9:17 AM
The Euro surged to the upside overnight, taking out the last swing top at 1.2779 and changing the main trend to up on the daily chart. Based on the range of 1.3334 to 1.2587, the EUR USD is now set up for a possible test of the retracement zone of this range at 1.2960 to 1.3049. A downtrending Gann angle from the 1.3334 top is at 1.2974, suggesting the formation of a resistance cluster at 1.2960 to 1.2974 today and 1.2954 to 1.2960 on Thursday.
The initial catalyst behind the surge in the Euro overnight was the bullish PMI news from China and the better than expected growth report from Australia. Both news pieces helped rally Asian stocks leading to greater demand for risk and subsequently the Euro.
News that the Euro Zone manufacturing recovery hit a six-month low failed to halt this morning’s advance. Overnight it was reported that the manufacturing purchasing managers’ index slowed to 55.1, with “moderated” growth both in output and new orders.
According to the report, the hardest hit country in the Euro Zone was Greece which is still trying to recover from its financial crisis from the Spring. Germany and France posted “strong growth”. The report also showed that the improvements were “still centered on Germany, the Netherlands and Austria”. The recovery was “comparatively modest” in Italy and Spain.
Although this report suggests that the region is cooling, the strength in Germany and France should be noted. The weaker countries are likely to bring up this fact at the next European Central Bank meeting on September 3. ECB members want to be assured that the Euro Region as a whole recovers at a similar pace so that the stronger countries do not dominate the weaker economies.
Despite the change in trend to the upside in the Euro, momentum must continue to remain strong to drive this market to the objective minimum objective of 1.2960 over the near-term
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