Euro vs USD - Daily Price Chart 6th May 2009

Euro vs USD - Daily Price Chart 6th May 2009

As the week unfolds markets are becoming increasingly nervous and unpredictable as we approach the release of the stress tests reports for banks in the US, interest rate decisions in Europe coupled with the ECB rate statement, and ending the week with NFP (non farm payroll) data.  Any of these individually have the power to move the markets dramatically, but as a combination they are potentially lethal and trying to forecast the price direction of any currency pair at the moment is proving increasingly difficult.  Yesterday’s price action was symptomatic with an early rise followed by a prompt fall on increasing worries, rumours and speculation surrounding both the stress tests, and the possibility or otherwise of the ECB introducing more extreme monetary and fiscal measures.  In addition with Japan still closed, and many currency traders and investors sitting on the sidelines this continuing lack of liquidity can only exacerbate an already tricky environment.

The euro to dollar is now waiting for the ADP release due shortly which if the numbers are better than expected could give the dollar a small boost.  From a technical perspective yesterday’s wide spread down bar has provided an interesting signal in the form of a tweezer top and whilst this signal is of lesser importance, nevertheless it does provide a snapshot and for those brave enough to trade would suggest an interim downwards move.

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