Daily Forex Analysis - Euro vs Dollar Chart 27th August 2009

Forex Technical Analysis

Yet again, the euro vs dollar attempted to struggle higher during the forex trading session, only to fall back later under the pressure from US Dollar bulls, and closed with a weak looking candle with a narrow down body and deep upper shadow. The high of the day was particularly interesting as this was the fourth consecutive failed attempt to break higher, clearly a sign of weakness in the euro vs dollar daily chart. However before we get too carried away with our technical analysis and assume that the pair are 100% bearish, it is interesting to note that the low of the day found support from the 9 day and 14 day moving averages, and therefore any analysis must bear this fact in mind. Like many other markets at present, one senses that we are now waiting for a return of normal trading volumes and consistent news before the new longer trend for the euro vs dollar is established, and my personal view is that this is unlikely to happen before US Labor day next month. Once this is over, then we should see a return to more normal forex trading conditions, and a move away from the consolidation of the last few months as a result.

Fundamental Forex Analysis

The key fundamental news items for today were always going to be the Preliminary GDP and Employment numbers in the US, the first of which provided some good news for the US economy. coming in at -1.0% against a forecast of -1.4%, suggesting that the recession may be finally easing its grip, a huge improvement on last quarter’s figure of -6.4%. The employment figures were less welcome with a further 570,000 registering for unemployment insurance against a forecast of 562,000, but on balance probably more good news than bad this afternoon for the US dollar. Over in Europe the fundamental news centred on Germany with the ‘all day’ release of the CPI numbers from all the German states, which exceed expectation at 0.2% against a forecast of 0.0%.

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