euro vs. dollar

Euro vs Dollar Chart 23 Sep 2010

Following yesterday’s strong breakout by the euro vs dollar it is hardly surprising that today’s has seen a minor pause and pullback which was given a further nudge by the fundamental news from the eurozone which saw both German and French manufacturing PMI and services data all come in below forecast, across the board.  From a technical perspective the outlook for the euro vs dollar is now bullish for three principal reasons: first yesterday’s widespread up candle breached the potential resistance level at USD1.3318, closing well above at USD1.3395 and thereby establishing a strong platform of support below.  Secondly, with the break above the key 200 day moving average which is now sitting well below at USD1.3206, it too is adding its own considerable weight to the bull side.  Finally, both the 9 and 14 day moving averages have now crossed firmly above the 40 day average and should these subsequently cross the 200 which is sitting close by, then this will add yet further momentum to the bullish trend.  As such we can now expect to see the euro vs dollar to the potential resistance at USD1.3689 and should this fail to hold then we may even a re-test of the high of March at USD1.3816 in due course.

This afternoon seems two important fundamental news items for the US, the first of which is the unemployment claims data which is forecast to remain stubbornly flat at 450k, indicating once again the fragility of any potential recovery whilst in contrast the existing home sales may provide a glimmer of hope for the US market and currency with a forecast increase of 280k from last month.

Euro steps back as growth slows