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Euro vs Dollar 29 Sep 2010

euro to dollar

The euro vs dollar surged higher yesterday on the daily chart ending as a wide spread up candle which just failed to breach the USD1.36 price handle on the day. This upwards momentum for the euro vs dollar is being helped both technically and fundamentally in the following ways.  From a technical perspective the current move higher is finding strong support from the 9 day moving average which is providing a solid platform as the upwards momentum continues to build, and with the 14 now crossing the 200 day, this is adding to the positive picture and giving us a bull cross picture.  Having broken through much of the deep price congestion now immediately below the only barrier to any further move higher is the 200 week average which now resides at USD1.3912.  Any break will open the way for a move back into the USD1.4000’s and beyond.  From a fundamental perspective the euro is benefitting in several ways, not least of which, is the continued and sustained weakness in the US as a result of the FED’s hints of further quantitative easing – moves which are almost always certain to debase and devalue a currency.  In addition the euro is increasingly being seen as a safe haven currency and a refuge from the currency wars which are breaking out in the forex markets, led by Japan, Korea, China, Taiwan who are all increasingly desperate to protect their manufacturers from a strong currency.  As such we can expect to see these factors continue to combine to propel the euro vs dollar higher in the medium term and on towards the USD1.3910 target outlined above.

With nothing other than the crude oil inventories in the US later today, we will need to wait until tomorrow’s unemployment claims in the US for any tier one release for this pair.

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