Euro vs USD 11th May 2010

Having initially reassured the markets with their 750bn bailout at the weekend the euro vs dollar closed yesterday’s trading session well below all four moving averages as a wide spread down bar with a long upper wick suggesting a combination of doubt, scepticism and bearish sentiment.  This has continued in today’s trading session with trading confined to a very narrow range resulting, so far in a small doji cross candle as the bulls and the bears fight for direction, despite the spread falling on Greek, Spanish and Portuguese bonds.  However, as Marco Annuziata, the chief econonist at UniCredit, has said:  “The spread tightening has so far been driven mostly by ECB purchases and some short-covering, with much less buying interest from real money accounts,” which leaves the euro vulnerable to further sell offs.  From a technical perspective USD1.25 still remains the first key support area, followed by USD1.2330, last seen in mid 2008.

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