Euro vs Dollar Daily Chart 10 August 2009

Euro vs Dollar Daily Chart 10 August 2009

Friday’s wide spread down bar on the euro vs dollar daily came as a great relief to Dollar bulls who had all but thrown in the towel since the great breakout of last Monday as momentum from NFP figures sent the Eurodollar plunging straight back into the USD1.42 congestion area.  In addition Friday’s close finished well below both the 9 and 14 day moving averages.  However, before the Dollar bulls become too euphoric any move lower will require sustained effort and force to drive through the strong support zone immediately below and I suspect that the markets will now await until Wednesday for the FOMC statement before deciding whether this is merely a short term reversal or the start of the long claw back by the US Dollar.   At the same as the FOMC meeting this week’s sees a raft of data from China which should give the markets some clear signals as to whether we are really at the dawn of a sustained (and sustainable) global recovery.  These two factors may also confirm whether the recent tight correlation between the US Dollar and equity markets may now be coming to an end and whether the FED is likely to signal the start of any tightening of their monetary policy.  My trading suggestion for today is to stand aside given the complete lack of life or momentum in this currency pair.

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