Support for the Euro and the Pound

The Euro and the pound had a huge day on Friday, March 16, 2012. Each of these currencies rose in value by more than 1 percent early on during the U.S. trading session. For the British pound sterling, this marked the largest gain in a single day since the middle of December, 2011.

The other side of this coin is that the U.S. dollar has fallen quite a bit in price. Because of a poor showing across the board, the dollar fell against all of the major currencies. This reversal in consumer sentiment was unexpected, but based upon recent gains against the Euro, the reversal could have been anticipated. With the use of Fibonacci retracement tools, the Euro looked like it had been approaching the critical support level and a rebound was imminent. Rather than buying dollars, because the Euro had reached this support level at right around 1.300, it only makes sense that the price of the Euro would begin to climb in relation to the USD.

Shortly after hitting the support level, the Euro skyrocketed toward to the critical Fibonacci level of 61.8 percent. The Euro will very likely stall out at this level before climbing even higher in price. The fundamental strength of the Euro is still increasing thanks to positive momentum in solving the Euro Zone’s debt crisis. With the Euro currently in between the 100 percent and the 61.8 percent levels, it is very likely that the Euro will continue to increase throughout the course of the trading day.

The British pound, when viewed through the lens of Fibonacci retracement, also had some predictable movement, although it moved much more quickly than the Euro did. It stayed at its critical support level only long enough to rise back up to 23.6, consolidate for a few moments, and then go up to 38.2. It then jumped up to the next key Fibonacci number, 61.8 percent. It is very likely that the pound will pause here for a bit longer as consumer sentiment catches up to the fast moving pound.

These moves coming from European currencies marked a new phase in the recovery from the debt crisis. It looks like consumers are becoming a lot more confident in the European market and are willing to risk money to take advantage of the positive growth. It might be too soon to actually say that Europe’s economy will fully recover in the near future, but the excitement within the Forex market is clear. The Euro and the pound are no longer the dangerous investment that they were even a few days ago. While a scaling back in activity is very likely, this is good news for traders looking to make money with the Euro and the pound.

This entry was posted in currency and tagged , , , .
Sign up to get a REDUCED price on any Forex Product and also receive the Best Forex Rebates available.

Related Posts

  • No Related Posts

Download a Free Trading Strategy

Get your Free copy of our Range Expansion Reversal Strategy. Best used with other Great Forex Products such as Tom's EA.

Secret News Weapon Spike

Secret News Weapon