Morning Futures Roundup

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Euro-phoria
 Fundamentals

Euro currency futures are higher this morning, on news that the French and German economies unexpectedly expanded during the second quarter of the year.  This adds to the negative Dollar sentiment caused by the FOMC stating that the central bank will keep rates low for an extended period of time.  Also, the Fed will be discontinuing its treasury buying program in October, which could also have negative repercussions for the greenback. 

Index futures around the globe are higher on the positive GDP data, which shows that investors are once again in risk-taking mode, which would favor the Euro versus the US Dollar.  The Fed policy statement confirms what many traders had already believed - that the ECB will be much more aggressive in tightening rates in the future than the Fed.  If equity prices are able to continue posting solid gains, the Euro figures to build on its gains against the USD. 

The primary concern that Euro bulls may have at the moment is whether or not equities will be able to build on recent gains.  Economic data on both sides of the Atlantic has certainly turned much more positive in recent weeks, but traders may be jittery about the quick rise in equity prices recently.  This could result in a pullback in the stock market, which could cause the exchange rate of the Euro to correct.





Technical Notes

The September Euro chart shows prices maintaining the uptrend line.  In order for the market to maintain its upward momentum, prices would need to trade above the recent high close of 1.4430.  The 50-day moving average, in addition to the uptrend line, has acted as support since early July.  Failure to hold the trendline and the 50-day MA could be seen as a sign that the intermediate trend may reverse.  Despite prices rising for three consecutive sessions, the momentum indicator is flat, suggesting prices could possibly pull back in the near-term.


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