The S&P Stumbles Around its prior highs, Euro Loses its Steam

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The S&P Stumbles Around its prior highs, Euro Loses its Steam Empty The S&P Stumbles Around its prior highs, Euro Loses its Steam

Post  harpal1980 on Fri Nov 13, 2009 11:39 am

After presenting a dramatic rally, the S&P500 hit a wall of resistance yesterday, dropping further into its recent range. Better than expected jobless claims and good results from the giant Wal-Mart didn’t help the intraday session, as investors took money off the table around high levels.
According to yesterday’s reading, the U.S market showed minor improvement in the employment sector as weekly jobless claims rose by only 502k, compared to an expected 512k. The number was better than the previous week, which showed a rise of 514k. Even though the number sparked some optimism at the start of the session it wasn’t enough to hold the indices in positive territory, especially as last week’s unemployment figure hit a whopping 10.2%.
The S&P500 dropped and closed the session below 1090 after hitting previous resistance. For the critical levels including the Fibonacci levels, see yesterday’s market briefing; major weekly technical levels

The Euro Feels the Pressure

On the Forex market the Dollar index bounced higher, forming a double bottom around the 75 level. Even though most of the pairs didn’t present dramatic moves, the EUR/USD tumbled after touching its prior high.
The EUR/USD wiped out all of its weekly gains and closed the session on prior resistance, which is now acting as support. Economic data also didn’t help the Euro as Industrial production dropped by 0.3% after showing a prior 1.2% figure. The number was under expectations and weighed on bullish sentiment.
On the upside the ECB monthly bulletin showed positive numbers. The GDP figure was revised from -4.5% to -3.9%. Furthermore the report showed that growth is expected to be at 0.1% in 2010. Regarding inflation, the numbers should stay the same and are expected to come out around 1.2%,

From a technical point of view the EUR/USD has now dropped into a minor range of 1.4850-1.5050. While it is still too early to determine a double top scenario, further negative sessions from the U.S could weigh on the Euro and drive the pair to lower levels. One must note that the trend line will act as a critical support level, as in the past.

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