euro vs dollar

Euro vs Dollar 15 Oct 2010

The technical picture for the euro vs dollar remains firmly bullish as continued and systemic from the US currency propels the euro higher, rather than from any positive eurozone news or sentiment.  Indeed this is a feature that we are likely to see over the coming weeks as the FED’s policy on QE2 really gets into its stride and the printing presses begin to roll.  We may even see some further light shed on this subject this afternoon with Fed Chairman Ben Bernanke due to deliver a speech “Monetary Policy Objectives & Tools in a Low Inflation Environment” at the Federal Reserve Bank in Boston – you couldn’t find a bigger red, neon arrow pointing the way even if you tried!!

From a technical perspective yesterday’s price action resulted in a narrow spread up candle with a deep wick to the upper body which hinted at a possible minor retracement for the pair, but so far in this morning’s early trading session, the pair has continued higher to trade at time of writing at USD1.4075, having breached the USD1.41 level earlier at USD1.4113.  The 9 day moving average continues to provide excellent support to moves on the daily chart and with the 14 day also providing a strong platform the upwards momentum remains strong.  This is further confirmed by the 40 day moving average which has now crossed above the 200 day, adding further weight to this analysis.  On the weekly chart the picture is equally positive with the euro vs dollar having breached the 200 week average and both the 9 and 14 week ma’s now crossing above the 40 week.  As such we are now set to test resistance at USD1.4336 and any break above here will test the underside of the USD1.4579 level and once QE2 begins to roll, expect to see a test of the USD1.5145 of late 2009.

The only significant items of fundamental news today, aside from the speech from Ben Bernanke, include core CPI, core retail sales, retail sales and the UoM consumer sentiment in the US.  So a busy afternoon for all the markets.

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