euro vs dollar

EUR/USD daily chart - 10th November 2010

The weakness of the last few days continued once again yesterday, with the euro vs dollar closing lower once more, as we approach the key 40 day moving average on the daily chart. Friday’s bearish engulfing signal was duly validated on Monday, with the price action breaking below both the 9 and 14 day moving averages, and indeed in yesterday’s forex trading session, the 9 day moving average proved to be a substantial barrier to the attempt to rise, with the high of the day at 1.3985 failing to breach this indicator, and falling back to close lower as a result. However, it was interesting to note that the low of the day found support from the 40 day moving average below, a characteristic we have seen once again in early trading this morning, with this longer term moving average providing a platform of support following the sell off in the euro vs dollar in last few days. This is now an important level, and should this subsequently be breached with a hold below, then expect to see the euro dollar move lower, possibly even as far as a test of the 200 day moving average in due course. However, should the 40 day moving average remain unbroken and hold firm, then this could provide the necessary platform for a recovery in the euro vs dollar, and a move higher once again to retest the high of last week.