Euro Dollar Candle Chart - 26th March 2009

Euro Dollar Candle Chart - 26th March 2009

Yesterday’s candle closed up on the day largely as a result of Mr Geithner’s unprompted and unexpected remarks about the possibility of the US dollar losing its status as the world’s reserve currency.  Up until this point the euro dollar had been falling very nicely and I hope that you moved your stop losses down and locked in any profits.  From a technical analysis point of view it is interesting to note that the last 3 candles have all closed with lower highs on the day suggesting that we should see a further decline in the euro vs dollar pair in the short to medium term.  As I mentioned yesterday the moving averages have been somewhat distorted by last week’s 500 pip candle and under normal circumstances these would suggest a move higher which is making trading decisions slightly more awkward at the moment.

The fundamental news on the economic calendar which may impact the euro vs dollar today is in the US and ranges from a scheduled appearance by Mr Geithner before the House Financial Services Committee where he is expected to testify on Financial Market Regulation (yes, well what can one say that hasn’t been said already!).  The unemployment figures which are likely to show a similar number as per last week, at around 650k, and release of the final GDP figures which are forecast to be -6.6%.   Normally the unemployment and GDP would be expected to have more of an impact on the markets, but given yesterday’s unprompted and unscheduled appearance Mr Geithner’s words will be watched rather more closely than usual hence making this afternoons’ trading extremely difficult.  My suggestion for today therefore is actually to step aside for 2 reasons.  Firstly because of the uncertainty surrounding Mr Geithner and his comments, and secondly there is an interesting candle forming on the week which I will comment on over the weekend.   This is further reinforced by the hourly chart which is now forming a strong pennant pattern suggesting that we will see a breakout in this timescale which could go either way.

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