euro to dollar

Euro vs Dollar Chart 26 Jan 2011

Euro bears continue to be dumbfounded  as traders and investors persist in ignoring the debt problems of the eurozone  and last week finally threw in the towel as the CME reported a dramatic switch in euro futures from short to long positions.  In addition this Monday’s euro bond auction saw “spectacular demand” and has seen the euro vs dollar push back to test the USD1.37 price region in this morning early trading as traders now wait for the outcome of the FOMC meeting.

Recent hawkish comments from Jean Claude Trichet have also helped the euro vs dollar claw its way out the its recent two month’s sideways price which saw the pair test the USD1.35 price zone on at least 5 occasions.  The question is now whether the pair can climb all the way back to the November 2010 high of USD1.4282 but we cannot make an informed decision until later today once the FOMC meeting has concluded.  From a technical perspective there are two key areas to consider.  The first is a break and hold above the 61.8% fib retrace level from the low of USD1.2873, which now sits at USD1.3743 and any move through there will then confirm the likelihood of a further upwards move for the euro vs dollar.  The second is the strong band of resistance which runs from 1.3824 through to 1.4023 and both these technical levels will need to be breached before we can be certain of the move back to USD1.4282.

Strong Demand for Eurozone Debt