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Euro versus Dollar Trend 2 Dec 2009

euro vs dollar chart 1 Dec 2009

Although the euro dollar managed to close higher once again yesterday it was without any great conviction as it ended the day at USD1.5090 and creating a narrow spread up candle but with shadows to both the top and bottom.   As suspected the price action of Friday, has in fact resulted in a move higher, which was my instinctive feeling, and whilst the last two days have been less than convincing, the 9 and 14 day moving averages  do seem to be adding some support to the move which suggests that the bullish momentum, whilst not strong, still remains in place. However, this is counterbalanced by the apparent difficulty that the currency pair is having at present in breaking above the 1.5150 price level established with the breakout of last week, but should this be breached in due course ( as expected ) then we should see a continuation of the rally, with 1.5250 as our initial target followed by 1.55 by the year end. However, until we see a clear break and hold above the 1.5150 level, the picture remains mildly bullish and any short term positions to the long side should be well protected with a trailing stop loss.

With only the PPI for Europe due for release later this morning the market will be looking at the US where the ADP Non Farm Employment Change figures are due for release and are forecast to come in at -149k.   With Non Farm Payroll due on Friday the ADP has in recent months proved to be remarkable predictive.  In addition as the data is collated from a wide range of US corporations is an excellent leading indicator of employment conditions – essential for consumer confidence and therefore a good gauge of the overall economy.  Its impact cannot be underestimated and taken together with the NFP should give us a clue as to the short to medium term direction for the US Dollar.  This afternoon also sees the release of the crude oil inventories.

Support & Resistance for the Euro Dollar :

S1:   1.5002       R1:   1.5147

S2:   1.4915       R2:   1.5205

S3:  1.4857       R3:   1.5292