Daily December Euro Pattern, Price & Time Analysis
The December Euro is showing a little strength this morning. Technically the market has pierced a downtrending Gann angle from the 1.4241 top at 1.3520. Although this does not mean the trend is turning to up, coupled with the support base that has been building since the single currency bottomed at 1.3420, one can build a case for the start of a possible short-covering rally
Economic news may take a backseat today as the focus seems to be shifting toward sovereign debt ratings. After it was announced that the U.S. congressional super committee failed to reach a debt solution, credit agencies maintained their opinions on the sovereign debt of the U.S. Fitch Ratings, Standard & Poor’s and Moody’s all held their ratings unchanged.
Even though a sigh of relief was expressed on the news from the rating services, earlier in the day traders gave their opinions of the whole mess by selling off equity and commodity markets. Traders had been concerned that a failure by the debt committee would have meant another debt downgrade similar to the one the S&P Corp. expressed in August after the U.S. debt ceiling was raised.
Although the Euro is trading a little better this morning, conditions could shift back to bearish rather quickly. The sovereign debt crisis is still a major concern. In addition, Moody’s on Monday warned that French debt could lose its triple-A rating. Increased borrowing costs and slowing growth are the main concerns. Since the U.S., Spain and Italy have already faced downgrades in the past, a cut of France’s rating, while it wouldn’t be a surprise, could create turmoil.
As it stands this morning, Europe is still facing a debt crisis and the December Euro is trading higher. Relief that the U.S. didn’t get its credit rating cut could mean that Monday’s sell-off in the Euro, equity and commodity markets may have been overdone. The only conclusions I can reach for this morning’s rally are the risky markets are oversold on a short-term basis or traders have decided to start the Thanksgiving break early by squaring their short positions.
