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Euro vs Dollar 1 Sep 2010

euro to dollar

The euro vs dollar continues to trade in a very narrow range with both last week’s trading and this week establishing a floor in the USD1.2600 price area. Until today price action to the upside had been firmly capped by the 14 day moving average, giving us a firm signal that the longer term bearish picture for the pair remained firmly established.  However, today’s break through this technical indicator has suggested that we may have to wait a little while longer before we see the next leg down in this longer term bear trend which will, no doubt, develop in due course with a re-test of USD1.2151, followed by USD1.1876.  Indeed despite today’s move higher the 40 day moving average capped any further advance suggesting that this is likely to be a short lived recovery and as such we can expect to see a break below this current floor and a move through uSD1.2587 in due course.  Once this has been breached then expect the pair to move lower with added momentum and re-test the price points outlined above in due course.  The 200 day moving average continues to overlay the technical picture adding its considerable weight to the bearish tone.

This week’s fundamental news is, of course, dominated by Friday’s non farm payroll data which is expected to show a modest improvement at -101k but if it mirrors today’s ADP figures (which came in much worse) and confirms the labour market refusing to improve (along with the housing market) will, no doubt, prompt the FED into further QE measures.  These measures, in the long run, will be heavily dollar negative.  The market’s reaction and sentiment towards to the US can, of course, be tracked in the USD index – a crucial tool for all forex traders.

Tomorrow has the ECB interest rate decision and associated press conference which may cause some volatility given Axel Weber’s recent forthright comments about the necessity of maintaining liquidity, pre-empting as well as subverting any comments from Jean Claude Trichet.  The market will be waiting to see how he deals with such subordination!  The remainder of this week’s forex trading news for the euro vs dollar can be found on my main forex trading site.

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The solution to the ECB’s problems (as per Goldman Sachs!)