Euro vs Dollar - EUR/USD Daily Candle Chart 11th August 2009

Euro vs Dollar - EUR/USD Daily Candle Chart 11th August 2009

The current sea change of sentiment towards the US Dollar has resulted in a huge shakeout in the euro vs dollar pair.  Whether this is a temporary reversal or the start of a renewed love affair with the greenback still remains to be seen and perhaps we may have a clue once this week’s FOMC meeting is concluded.  Should the Committee decide to signal the possibility of higher interest rates then this could be seen as Dollar positive and speed up the current decline in the Euro still further.  From a technical perspective yesterday’s down bar merely added further downwards pressure on the Eurodollar pair as it pushed ever deeper into the strong support between the USD1.375 and USD1.425 price band, closing just above the 40 day moving average.  Any dollar positive news from the FED could create another wide spread down bar on Wednesday/Thursday which may provide sufficient momentum to break below the bottom of this channel.  Should this occur then this may well signal the end of the current rally for the Euro and a prolonged period of Euro weakness and Dollar strength.

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