euro vs dollar

Euro vs Dollar 18 Oct 2010

The daily chart for the euro vs dollar has thrown up some interesting signals in the last few days, not least of which was Friday’s deep shooting star candle which replicated the smaller version that we saw on Thursday, and as such, gives us a strong indication that we are likely to see a retracement from the recent bullish trend in the euro vs dollar.  Indeed so far this morning the euro vs dollar has traded lower, moving from an initial USD1.3954 to currently trade at USD1.3892, having touched an intra day low of USD1.3830.  It is interesting to note that the 14 day average has already provided support to this morning’s price action resulting in a bounce higher and for any further development of this short term reversal we need to see a break and hold below the 14 day average.  If this indeed does occur later in the week then we could see the euro vs usd push lower towards a test of the USD1.36 area but the longer term outlook still remains firmly bullish for the pair so we expect this move to be a temporary one.  This analysis should also be read in conjunction with the usd index chart which has a long leg doji candle on the weekly chart, which in itself suggests a potential turning point, coupled with a hammer candle on the daily, which again is signalling a reversal higher.  With little in the way of fundamental news today, other than the TIC Long Term Purchases in the US, which are forecast to come in below last month’s 61.2bn, to come in at 47.5bn, we will have to wait for later in the week when we have a slew of news which will give us a better idea for the next price phase for the euro vs dollar.

Both China & US at fault in currency way