Euro Continues to Climb; Dollar Soars Versus Yen as S&P Cuts Japan’s Debt Rating
The Euro continues to climb higher this morning, challenging the .618 retracement level of the 1.4282 to 1.2873 at 1.3744. There may be a technical bounce off this level, but this action will most likely represent profit-taking rather than a change in trend. Both technical and fundamental factors are supporting the rally at this time, so if a top is formed it will come as a surprise.
Greenback Continues to Get Pounded; Fed, Treasury Remain Quiet about Weakness
November Crude Oil continued to slide lower on Thursday on light volume. Demand for higher risk assets was down contributing to the decline.
The biggest factors driving crude oil prices lower are the slowing economy and oversupply issues.
Technically, the main trend is up on the daily chart unless the last swing bottom at 74.24 is violated.
The Australian Dollar continued its rally which started on Tuesday following hawkish comments from the Reserve Bank of Australia. The RBA’s policy statement turned around a sluggish market by stating that interest rates are likely to rise despite concerns about inflation and a possible slow down in the Chinese economy. Greater demand for higher risk assets also fueled today’s rally.
Euro Continues to Rise after Breaking Retracement Zone
Investor optimism over a resolution to the sovereign debt problem in Greece and improvements in the U.S. economy are helping to boost U.S. equity markets following a change in trend to the upside on Monday. Traders expect the trend to continue today as the charts indicate very little resistance to the upside.
U.S. equity markets are trading overnight and are expected to open slightly above near-term support. The March E-mini S&P 500 broke an uptrending Gann angle at 1132.25 which has held as support since November 27th. This is a sign of impending weakness. Short-term support is a retracement zone at 1129.00 to 1124.50.
Asset Allocation Play Continues; Stock Rise, Treasuries Break Overnight
U.S. stock indices are trading better overnight. Last night’s rally took out the recent top in the March E-mini S&P 500, reaching 1114.75. The next upside targets are 1119.00 to 1122.00. Optimism over a U.S. economic recovery is encouraging investors to seek higher yielding stocks at the expense of Treasuries and Gold.