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Forex Technical Analysis Euro vs Dollar 22 Sep 2009

Forex Chart Analysis: Euro vs Dollar

Another quiet day for the euro vs dollar pair, as the markets traded on a day with little fundamental news of any note, and with one eye on Wednesday’s FOMC statement and interest rate decisison, which could be significant for the US dollar.  Technically, yesterday’s candle ended with a narrow spread down bar, but with a deep lower wick, which seemed to find some support from the 9 day moving average, and which would therefore suggest that the bullish sentiment for the euro vs dollar still remains the dominant theme at present.  The key, of course, this week will be the two day FED meeting, which starts on Tuesday and concludes on Wednesday, with the interest rate decision being of secondary importance, as this will almost certainly remain on hold at 0.25%.  What is far more important is the statement which follows the decisison, and any clues that the commitee are likley to give regarding future monetary policy and how this will affect the US dollar. With the US dollar now in favour as the currency of choice for carry trade speculators, any shift in policy by the FED signalling a rise in interest rates rather more quickly than the markets expect, could trigger a rally in the US dollar as a result, with a consequent fall in the euro vs dollar as a result. Whilst this may not occur, the recent move higher by the euro vs dollar has been far from dramatic, with the upwards trend having been completed in a series of narrow spread candles, with no  noticeable momentum following the breakout of two weeks ago. With all three moving averages still pointing sharply higher, there is little to suggest at present that the recent rally has run its course, however, with the FOMC meeting now on the horizon, and with the move higher appearing to run out of steam, then Wednesday could be a seminal day for the euro vs dollar.

Fundamental Forex Analysis: Euro vs Dollar

There is virtually no fundamental news on the economic calendar of any significance for either the Euro or the Dollar today other than the Italian unemployment rate which is expected at 7.7%, a small increase on the previous of 7.3% and later this afternoon in the US, the HPI and Richmond Manufacturing Index.  The HPI measures the change in the purchase price of homes with mortgages backed by Fannie Mae and Freddie Mac.  It is considered a leading indicator of the health of the housing sector as rising prices are seen as evidence of a buoyant sector.  A bad number could trigger a move back into safer investments, such as Treasuries. The forecast number is for 0.5%, no change from the previous.  The Richmond Manufacturing Index is another composite based on a survey of manufacturers in Richmond and the forecast number is for 17, up from the August number which came in at 14.