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Euro vs Dollar 8 Nov 2010

euro to dollar

An interesting signal on the euro to dollar chart with Friday’s price action resulting in a wide spread down candle aka a bearish engulfing which suggests that we may see a short term re-tracement for the euro to dollar.  Indeed in early trading so far today the pair has pushed lower, continuing Friday’s negative sentiment to test support at the 14 day moving average in the USD1.3967 region.  At time of writing the euro to dollar has broken below to trade at USD1.3937 and should this subsequently close this evening below both the 9 and 14 day averages then this will add further bearish weight to the current pullback.  Whilst the longer term outlook still remains bullish, in the short term we may see a re-test of the current platform of support in the USD1.39 region and a possible deeper move to test the 40 day moving average which currently sits at USD1.3723 and indeed this longer term ma may prove to be significant in due course.  A bounce here should provide the necessary momentum for a recovery and resumption in the longer term upwards trend but should this fail to hold then we could see a longer term technical reversal for the pair over the next few weeks.

After last week’s intense week of fundamental news this week is relatively quiet for both the euro and the US dollar with the main highlights being the trade balance figures for the US on Wednesday, coupled with the unemployment claims and Friday sees the German preliminary GDP number in Europe which will be a key measure of the European economic recovery.  The week rounds off with yet another round of G20 meetings in Seoul which will no doubt agree very little but still cause some ruction in the markets.

Euro suffers as fiscal concerns re-surface