Euro Dollar Daily Candle Chart - 10th March 2009

Euro Dollar Daily Candle Chart - 10th March 2009

Yesterday’s price action opened gapped up in early trading, steadily falling during the day and recovering in the evening session to leave us with a down candle with a long lower shadow which does little to clarify the current sideways consolidation.

Overnight price action saw the euro dollar rise this morning but the sideways consolidation continues unabated with the 9 and 14 day moving averages having converged.  Until we see a break below the 1.25 region or above the 1.325 region it is impossible to say with any degree of certainty which way prices are likely to move in the longer term.

It is interesting to note that in the COT data reported by the Daily Telegraph net short positions on the euro have increased by 9,500 contracts by the non commercials in one week with many analysts now suggesting that signficant euro weakness could appear in the next few months.   For those of you with volume charts with your ECN broker you will note that trading volumes generally are significantly lower since last year.  Thin market conditions make for difficult trading conditions and add to the random volatile moves we are seeing on the euro-vs-dollar today.

We can expect yet more price gyrations shortly when Ben Bernanke is due to deliver his keynote speech entitled: “Financial Reform To Address Systemic Risk” – better late than never!!

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