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Forex Analysis Euro vs Dollar 16 Sep 2009

Forex Technical Analysis

Yesterday’s candle on the daily euro vs dollar chart, reinforced once again the bullish sentiment which is now strongly evident in this forex pair, closing the trading session with a narrow body but with a deep lower wick, and well supported by the 9 day moving average.  The reversal in the dollar’s fortunes which many had been expecting has, so far, failed to materialise with the dollar index continuing its steep decline and given the technical picture for the index we should now see the euro vs dollar push higher towards an initial target of USD1.50 in the short term and possibly USD1.55 in the medium term.  With the strong support platform now in place below we have plenty of protection to any short term reversals and therefore the only way to trade this pair at present is to the long side taking advantage of the upwards trend which is now developing nicely.

Forex Fundamental Analysis

Fundamental news on the economic calendar for the euro vs dollar starts today with Eurozone CPI which is forecast at -0.2%, unchanged since the last time and Core CPI which is expected at 1.2% as opposed to the 1.3% recorded previously.  The focus then turns to the US where the data set starts with US Core CPI, CPI and the Current Account at 13.30 GMT.  The first is epxected at 0.1%, unchanged since previous, CPI is forecast at 0.3% against a previous of 0.0% and the current account is expected to come in at -92bn as opposed to a previous of -101bn.   Half an hour later we have the TIC data, a crucial measure of the difference in value between foreign long term securities purchased by US citizens and foreigners.  The forecast is for 65.3bn, a fall since last month which posted 90.7bn.  This is an extremely important number and should give the forex traders an indication of the demand for US T-bills – and maybe a clue as to whether the US dollar is likely to stop its inexorably march down.   The day ends with three other pieces of economic data: the first is the Capacity Utilization Rate which is considered a leading indicator as it measures when producers are nearing full capacity and therefore need to start raising prices and higher costs to pass onto consumers.  Today’s number is expected to come in at 69.1%, a small increase from previous.  The second item is Industrial Production, forecast at 0.7% against a previous of 0.5% and finally crude oil inventories which analysts have forecast to drop by -2.6mb against last month’s dramatic -5.9mb.  Gasoline & distillate stocks are expected to rise.