Euro Dollar Daily Candle Chart - 17th July 2009

Euro Dollar Daily Candle Chart - 17th July 2009

The euro vs dollar continues to tease, edging ever closer to the pivotal 1.43 technical level on the daily chart.  Yesterday’s candle failed to deliver on the momentum generated by Wednesday’s wide spread up bar, ending the trading session as a spinning top doji suggestive of general indecision and a lack of direction.  Much the same price action has been seen in today’s trading session where once again prices have drifted and echoed the various news items and general market sentiment ahead of the weekend.   As outlined many times in this market commentary for a break to occur out of the current trading range we need to see a move and hold above 1.43 or alternatively a fall below 1.3750.  With all three moving averages now tightly intertwined these technical indicators are not providing any meaningful guidance at present and we now need to be patient and wait which is always very difficult.  However, one of the ways to try to gain some insight into the likely direction of any breakout is to consider and analyze other correlating and inter-dependent markets, one of which at present is the S&P500.  The chart for the S&P500 is at an interesting tipping point where the key resistance level is currently firmly in play at 940 on the daily chart.  Following the strong upwards move so far this week the S&P index is now attempting to penetrate this level and should this occur then with risk appetite returning to the markets this will generally favour the euro with consequent buying and a rise in the Eurodollar.  The effect is common in the EUR/JPY where once again the Euro will be the main beneficiary.  So far today the index has once again hovered around this key level and it seems unlikely to be breached today given the lack of major fundamental news or significant bellwether earnings and is trading marginally 938.19 at time of writing.

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