Euro vs Dollar - Euro Dollar Daily Chart 15th July 2009

Yesterday’s price action on the euro vs dollar daily chart was simply more of the same sideways consolidation in a very narrow trading range with the daily candle ending the trading session with a deep lower wick and small body, suggesting that the bulls were gradually gaining the upper hand once again.  Indeed this was a re-run of Monday’s candle which was almost identical.  This morning’s surge in the Euro therefore came as no great surprise and was largely triggered by better than expected fundamental news on the economic calendar in the US, and provided welcome relief to the range bound region of the last couple of weeks.  However, having seen these attempted break outs before we need to see this move validated and sustained over the next few days, and only a break and hold above the 1.43 price region will confirm whether the Euro bulls are back in charge.   The symbiotic relationship between the equity markets and the US Dollar will ultimately dictate the medium and longer term direction of the euro vs dollar and certainly today’s Dollar Index chart would seem to suggest that a break to the bearside has started with a possible deeper move in prospect.

The most recent item of fundamental news is the crude oil inventories which have come in well above forecast at -2.8m against -1.9m.   However, it is the stocks of distillate which is probably the more important number.  This too has come in better than expected at +0.5m barrels against a forecast of +1.9m barrels and it could be interpreted as yet another small  indication that the worst of the recession may now be coming to an end.  Taken in conjunction with the Goldman Sachs results an argument could be made that risk appetite may be returning to the markets which would lead to a consequent weakening of the US Dollar.   Finally today’s jigsaw of news will be completed with the release of the FMOC minutes which too has always had the capacity to move the markets.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.