Euro vs Dollar Chart 21 Jan 2010

Yesterday’s wide spread downbar accelerated the downwards pressure for the eurodollar and, more importantly, broke below the key technical level of the 200 day moving average – a significant event.  Any move below this key indicator now suggests that the eurodollar is heavily bearish and in the longer term we can now expect to see further falls as a result.  Whilst today’s price action has resulted in a minor pause with a small hammer candle suggesting a short term rally as well as an element of short covering, this is likely to be a temporary pause in an otherwise remorseless decline with USD1.38 the next target level and should this be breached then we can expect a run towards the USD1.30 and below.

In a relatively quiet week for fundamental news markets other than the ZEW earlier this week and PPI today (both of which have come in worse than expected) markets have been focusing on sovereign debt problems,in particular Greece and Portugal (although Spain will probably be the next shoe to drop).   Today the Greek Finance Minister George Papaconstantinou was obliged to deny a reply in the European Voice newspaper that EU officials were exploring the prospect of a loan in order to avoid turning to the IMF.  The finance minister said that Greece would not need outside help and would manage to meet its borrowing costs.  However, market reaction was to push the euro to its lowest point since August when it dropped to USD1.4028.    IMF warnings to Portugal concerning its budget deficit have done nothing to give the market any confidence in the euro.

What is one of the best retail forex trading platforms?  In my view it is Metatrader 4.  Advanced, powerful & intuitive it now comes with ECN execution, so you can happily scalp away without broker or dealer intervention.  Just download your free demo copy of MT4 by following this link – download metatrader free –  and get started today.  Don’t forget to follow my daily posts for updates and analysis of the forex markets to help you with your forex trading – so good luck and good trading.