EUR/USD Continues Move Lower Today On Ireland Downgrade

S&P lowered the sovereign debt rating of Ireland for the 2nd time in 2 months.  They also warned that it may be downgraded further in the future as banking bailout costs were likely to increase.  The rating was cut to AA from AA+.

The news has put pressure on the EURO as focus shifts from the dollar back to the weakness overseas.  This shift can happen on a dime as economic issues have the potential to be dire around the globe.  If the market is focused on the US issues the dollar is likely to suffer.   If sentiment is diverted to the EURO region or the UK (which is experiencing its own shift in political and economic fortunes) those currencies have the potential to suffer.

From a technical perspective, the EURUSD continued the consolidation/correction in early trading today. When the market price approached the 200 bar moving average at the 1.4000 area (high was 1.3996), the market resumed the downside again - falling through the 100 bar MA in the process at the 1.3972 level.  The low reached was 1.3805.  Profit taking buyers most likely emerged against stops below the May 28th low of 97.92.

The pair is now back off the lows approaching intraday resistance at the 1.3895 level.  This level should provide some resistance.  Watch this level this morning.

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