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Euro vs Dollar 27 Sep 2010

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The euro vs dollar continued its recent upwards bullish momentum on Friday ending the forex trading week as a wide spread up candle which pushed the pair deep into the price consolidation between USD1.3250 to the downside and USD1.3750 to the upside and, as such, we now sit at the midpoint of this price congestion.  The bullish trend continues to be firmly supported by the 9 day moving average and we were given a further signal at the end of last week as this key indicator crossed the 200 day average further confirming the present rally. Having broken above the high of August 2010 at USD1.3334, this is also providing an additional level of support to the current short term upwards momentum and with the 14 day average pointing sharply higher, the market is clearly euro positive at present.  As such we can expect to see the pair move higher once again this week and should we see a break and hold above the USD1.3817 high of late February then this will add a further layer of support the current bull trend.  However, it is important to note that at this level the pair could potentially run into resistance on the weekly chart from the 200 week moving average which currently sits at US1.3912 which may cap any further gain as a result.  In the short term, however, traders should look for small longs until we see a potential reversal signal.  However, with the usd index continuing to look particularly weak it may be some time before this emerges.

Today’s fundamental news for the euro vs dollar is limited to some speeches from ECB Chairman Trichet who has opened  the 13th conference of the ECB -CFS network on  “Macro Prudential Regulation as an Approach to Contain Systemic Risk” in Frankfurt.  Later in the day he is due to testify before the Economic & Monetary Affairs Committee in Brussels.  The only other item of fundamental news this morning was the M3 money supply which came in higher than expected at 1.1% against a forecast of 0.4%.  There are no other releases for either the euro or the US dollar until tomorrow so trading may be somewhat desultory but could be driven by unexpected news announcements – so tight stop losses are essential.

Eurozone Banking Concerns Weigh on Euro