The Euro is trading lower after posting a high at 1.4247 on Tuesday and forming a closing price reversal top. Downside pressure overnight confirmed the chart pattern triggering what is likely to be a short-term retracement back to 1.4000 to 1.3947.
Fundamentally and technically related pressure continues to mount on the Euro this morning. Technically the main trend is down on the daily chart. With downside momentum beginning to pick up, a support cluster target zone has been identified today at 1.3373 – 1.3367.
The Dollar is getting hit hard this morning as trader sentiment has shifted back toward risk, forcing bullish traders to unwind flight-to-safety positions initiated late last week.
The lack of confidence in Australia’s growth prospects has been helping to pressure the AUD USD. Traders started selling the Aussie after reports surfaced that some economists were cutting short-term gross domestic product forecasts for Australia following recent flooding in the state of Queensland.
Falling demand for risky assets and a stronger Dollar, helped drive November Crude Oil lower overnight. Shortly before the opening, however, crude oil is still trading down but off its low after stocks recovered from earlier overnight weakness and a stronger Dollar.
U.S. stocks are trading weaker ahead of the opening. The market started to weaken on Tuesday following a drop in consumer confidence. This report seemed to carry more weight than a string of better earnings reports. Equity futures actually reached their highs shortly before the opening and never really got on track, forming a top even before the consumer confidence data was released.
Weakness in global equity markets is helping to put pressure on the Euro and the commodity-linked currencies. Risk sentiment seems to have shifted overnight with investors becoming more risk averse. Profit-taking and position squaring ahead of the start of the U.S. earnings season appears to be the catalyst behind this morning’s early weakness.
Stock index futures fell sharply lower on Thursday as investors slashed positions following a weak outlook for the economy and bad earning expectations for consumer-oriented and energy stocks.
U.S. stock indices are called lower after a lackluster performance on Wednesday. Worries are the healthcare industry put a drag on the S&P 500 and Dow. Several healthcare companies issued lower futures earnings because of uncertainty over how much the new government healthcare plan will cost the economy.
The Euro has been under pressure since late last week when it failed to attract strong buying after the main trend turned to up. The overnight weakness has pierced the last swing bottom at 1.3384, turning the main trend back down. Downside pressure could build if this market takes out two key retracement levels at 1.3402 and 1.3370.
