An interesting couple of days for the euro dollar pair, with yesterday’s interest rate rise increasing the differential between the two currencies, followed by the Non Farm Payroll numbers which surprised the markets with another bad number. With all the problems in Europe the rational expectation is for the euro to collapse against all other currencies, so how does it continue to survive, given the problems in Greece and the other lame ducks of Europe. Well the answer lies in the fact that the euro is a political currency and therefore rational price action is rarely the norm making trading of any euro pair extremely difficult. This short video explains some of the issues and how the currency pair has reacted over the last few days to the flow of fundamental news.
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Archive for Euro vs Dollar Daily Chart
Euro vs Dollar 24 March 2011
This morning’s price action on the euro vs dollar threw me slightly as the pair continued yesterday’s move lower which was most likely triggered by the political problems in Portugal. Today’s move lower has been seen as a further buying opportunity for euro longs as the pair resumes its move to my end of week forecast of USD1.4228 – as posted on fxstreet. However, whether the pair can move beyond this price point will depend on number of factors including the extent to which ECB rhetoric will continue to support the euro despite problems in the eurozone periphery and from a technical perspective whether the usd index can hold the key 75 price point.
The euro vs dollar has continued in positive tone this morning through the London trading session, testing the fib 61.8 level once again, and now looks set for a rally higher and continuation of the recent bullish trend. Today’s video looks at the technical and fundamental outlook, as we head into another week of rate decisions in Europe with the ECB taking centre stage once again.
Euro vs Dollar Chart 26 Jan 2011
Euro bears continue to be dumbfounded as traders and investors persist in ignoring the debt problems of the eurozone and last week finally threw in the towel as the CME reported a dramatic switch in euro futures from short to long positions. In addition this Monday’s euro bond auction saw “spectacular demand” and has seen the euro vs dollar push back to test the USD1.37 price region in this morning early trading as traders now wait for the outcome of the FOMC meeting.
Recent hawkish comments from Jean Claude Trichet have also helped the euro vs dollar claw its way out the its recent two month’s sideways price which saw the pair test the USD1.35 price zone on at least 5 occasions. The question is now whether the pair can climb all the way back to the November 2010 high of USD1.4282 but we cannot make an informed decision until later today once the FOMC meeting has concluded. From a technical perspective there are two key areas to consider. The first is a break and hold above the 61.8% fib retrace level from the low of USD1.2873, which now sits at USD1.3743 and any move through there will then confirm the likelihood of a further upwards move for the euro vs dollar. The second is the strong band of resistance which runs from 1.3824 through to 1.4023 and both these technical levels will need to be breached before we can be certain of the move back to USD1.4282.
Euro vs Dollar Weekly Chart 18 Jan 2010
It’s tough being a euro bear at the moment as the markets continue to ignore eurozone debt problems as the single currency retraces to challenge the key USD1.3450 price handle. Today’s trading pattern has been typical since late November with today’s price action the pair’s fourth attempt to break free of this price zone. This fourth attempt is critical for a number of reasons, not least because, as a general rule of trading, whenever a price level is finally breached after so much sustained effort the resulting surge higher is likely to be more powerful. Indeed if the euro vs dollar does manage to free itself of the USD1.34 region then we can expect to see the pair look to an initial test of USD1.38 (where the 200 week moving average currently resides) before pushing on to re-test the high of early November at USD1.4282.
The only caveat to the above analysis is the picture in equity markets which have been moving into new high ground: the FTSE at over 6000, the Dow at 11,800 while the VIX is posting fresh lows as traders and investors move into a complacent and more optimistic mood.
EMU policies are pushing southern europe into systemic political crisis
Euro vs Dollar 5 Jan 2011
December 2010 for the euro vs dollar followed a pattern we have seen for the past 3 years, namely a reversal of trend, high volatility and complete unpredictability with the pair bouncing around the USD1.31 price level and protected by the 200 day moving average. It is this average which is now key to preventing the pair falling back towards the USD1.20 lows of last year. From a fundamental perspective the market’s focus for this week will be US employment data with Friday’s non farm payroll expected to come in at 136k against last month’s previous of 39k. With today’s ADP numbers coming in much better than expected, at 297k against a forecast of 101k should Friday’s data be as dramatic we could see a further resurgence in the US dollar. In addition to NFP the market will also be focusing on Ben Bernanke’s testimony before the Budget Senate Committee and whether the FED is definitely going ahead with the full QE2 programme and begin an aggressive purchase of longer dated T bills. However, given today’s much better than expected employment data & if Friday’s nfp comes in better than expected the market may have to be content with yet more ambivalence.
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