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Euro Dollar Trend – 2 Nov 2009

Euro vs Dollar - Daily Chart EUR/USD 2nd November

Technically a tricky end to the week for the euro vs dollar, which is now perched precariously on the 40 day moving average following Friday’s wide spread down candle which reversed all the gains of Thursday, with the closing price finishing marginally below the average once again. The picture is somewhat confused at present and there are several elements we need to consider carefully in our analysis in order to avoid jumping to the wrong conclusion. The first point to note is that we have a strong level of support in place at the current close of Friday, and coupled with the 40 day moving average could well provide a solid platform to prevent any further fall in the short term.  This positive view is counterbalanced by the negative sentiment from above with the 9 day and 14 day moving averages providing a bear cross and now weighing heavily on the euro vs dollar pair. In addition,of course,  we have Friday’s bearish engulfing candle which is adding to the mix, and all of this is against a backdrop of major fundmental news items this week including the FOMC decision on Wednesday, the ECB decision on Thursday and the Non Farm Payroll data on Friday, all of which could combine to signal a shift in sentiment to the US dollar and a consequent decline in the euro as a result.

As a result the key technical levels for this week remain the recent top at 1.5025, and should this be breached then we should see a strong move higher and on towarsd our target of 1.55 for the pair. However, to the downside a breach of the inital support level at 1.47 could signal a deeper move first to 1.45 and then followed by a retest of the 1.44 region, should this fail. Any further move lower would need significant momentum to breach the deep support immediately below, but with the news last week that the US is finally out of recession, coupled with the major announcements this week, this could be the trigger that sends the euro vs dollar lower in the short term.  I have covered the main items of fundamental news on the economic calendar for the EURUSD on the euro to dollar site.

R1:  1.4938    S1: 1.4740

R2:  1.5018    S2: 1.4622

R3:  1.5136    S3: 1.4542

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.