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Euro vs dollar set to move higher

euro vs dollar daily chart

Euro vs Dollar – Daily Chart Analysis

The euro vs dollar closed firmly higher on Friday, ending the forex trading session with a wide spread up bar, supported by strong buying volume, and closing at 1.3129, having broken above the psychological 1.3000 level earlier in the day. This bullish trend in the EUR/USD daily chart was first signalled by Hawkeye on the 21st August, with a change in trend dot color from white to green coupled with the Heatmap also turning green, and two consecutive Roadkill signals to the long side. Since then the pair have continued to move higher, supported rising buying volumes on both the daily and the three day chart suggesting that this trend has some way to run.

From a technical perspective a key level of support has now been created in the 1.2800 area, and with this now below, should provide a solid platform of support as the pair push higher. Above the current price action, a deep area of price congestion now awaits, but given the current bullish momentum and the strong volume, this is likely to be breached in due course and we should see the EUR/USD touch the 1.3500 level in short term, squeezing euro dollar shorts further.

The principle driver for this momentum is ofcourse the recent announcement by the Federal Reserve on Thursday to initiate a further round of quantitative easing, resulting in further US dollar weakness as a result. The news was largely expected by the markets, following Fed Chairman Bernanke’s hints at Jackson Hole two weeks ago, where he hinted that the Fed was ready to ‘pull the trigger’. With the starrting gun now having been fired, and with the Federal Reserve now pumping over $40 billion per month into US bonds and mortgage backed securities for the foreseeable future, we can expect to see the US dollar weaken further, with further gains for the euro vs dollar as a result.

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