Euro vs Dollar - Daily Technical Chart For EUR/USD 30th June 2009

Euro vs Dollar - Daily Technical Chart For EUR/USD 30th June 2009

Today’s deflationary fundamental news on the economic calendar for the Eurozone will pose a significant problem for the ECB and their interest rate decision on Thursday and given that we will also have the Non Farm Payroll data at the same time owing to Friday’s national holiday, there is one thing we can safely say “hang on to your lock-nuts, we’re in for a bumpy ride”.  The problem for the ECB is that this morning’s data paints a deflationary picture which of itself is bad enough with the spectre of growing choking off economic growth leading to even more insolvencies, but any hint of tighter monetary policy (ie raising interest rates) can only lead to a stronger Euro and all the problems that that would bring.   This delicate balance is reflected in the daily chart for the Eurodollar which continues to edge upwards within in the pennant pattern envelope, with yesterday’s candle confirming this indecision, ending the day with a lower wick and narrow body.  The low of the day found support from the 9 day moving average which helped to ease the euro vs dollar higher, but given that the 9 and 14 day are now enmeshed this signal has less validity than otherwise would be the case.  The technical picture is still building towards a breakout from the pennant formation and at some point we will see an explosive move on a wide spread bar and Thursday at 13.30 GMT may well prove to be this trigger when the ECB press conference and NFP data collide.

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