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Euro vs Dollar Update 18 Jan 2010

euro to dollar

It’s tough being a euro bear at the moment as the markets continue to ignore eurozone debt problems as the single currency retraces to challenge the key USD1.3450 price handle.  Today’s trading pattern has been typical since late November with today’s price action the pair’s fourth attempt to break free of this price zone.  This fourth attempt is critical for a number of reasons, not least because, as a general rule of trading, whenever a price level is finally breached after so much sustained effort the resulting surge higher is likely to be more powerful.  Indeed if the euro vs dollar does manage to free itself of the USD1.34 region then we can expect to see the pair look to an initial test of USD1.38 (where the 200 week moving average currently resides) before pushing on to re-test the high of early November at USD1.4282.

The only caveat to the above analysis is the picture in equity markets which have been moving into new high ground: the FTSE at over 6000, the Dow at 11,800 while the VIX is posting fresh lows as traders and investors move into a complacent and more optimistic mood.

EMU policies are pushing southern europe into systemic political crisis