Euro vs. Dollar Chart 3 Nov 2009

Euro vs. Dollar Chart 3 Nov 2009

The euro vs dollar remains a tricky pair to analyse at present, and yesterday was yet another day when the market could be called either way, with the trading session ending with a narrow spread down candle, but one with a deep lower wick, suggestive of a hammer candle and therefore of a possible move higher in the short term. This of course is counterbalanced by the fact that the close of the session finished below the 40 day moving average, and with all three moving averages now sitting above, this would normally suggest a bearish picture, which is certainly the case at present. However, for those of you trading last night, the strength of buying following the sharp sell off was evident for all to see, which technically all seems to have combined with the support level now immediately below. As a result the picture is therefore far from clear, and with the FED meeting in the US today, the ECB meeting tomorrow and NFP on Friday, the next three days could be seminal in deciding the future direction for the euro vs dollar in the short to medium term. Based on yesterday’s candle under normal circumstances I would expect to see a bounce higher in the next few days, but these ar far from ‘normal’ days, with the technical picture dominated by the fundamental news, and my trading advice is therfore to wait until the end of the week, when hopefully the market will have absorbed all the details and settled into a clearer trading pattern. In short if the FED signal a likley rise in rates sooner rather than later, then this could be good news for the US dollar, and any break below the current support in the 1.46 region could signal a much deeper move towards the 1.4350 area and possibly lower. For any sustained move higher we now need to see a break and hold above the new interim top established in the 1.50 price level. In short the next few days will be very interesting for the euro vs dollar pair.

Whilst the FED statement will dominate the fundamental news on the economic calendar today there are also several other significant releases which also have the potential to move the markets.  The day starts in Europe with two minor items: Final Services PMI and PPI expected to come in at 52.3 and -0.3%.  Focus then turns to the US where the ADP Non Farm Employment Change numbers are expected to come in at -188k.  Traders care about this data as it measures the change in the number of employed people and is based on the payroll numbers of large US corporations and excludes the farming industry and government – in other words the “real” economy.   This is followed by the ISM Non Manufacturing PMI which is expected to come in at 51.6 (anything over 50 is seen as a positive sign for an expanding economy) and crude oil inventories which are expected to show a further build.  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.

R1:  1.4820     S1:  1.4635

R2:  1.4908     S2:  1.4538

R3:  1.5005     S3:  1.4450