Euro vs Dollar Chart 29 Oct 2010

The euro vs dollar surged higher yesterday closing as a wide spread up candle which held above all four moving averages once again and confirming that the recent short term re-tracement for the pair is now firmly over.  Throughout this period of consolidation and re-tracement the 40 day moving average remained unbroken and, as such, confirmed that this was only a temporary reprieve for the US dollar ahead of next week’s FED meeting on Wednesday which is likely to confirm the rollout of the QE2 programme.  In the last few minutes we have had the release of Q3 advance GDP in the US which came as forecast at 2.% and, as such, adds further weight to the likelihood that the FED will indeed begin its QE2 programme early in November.  This will be dollar negative, sending the usd index dramatically lower and the euro higher, as a result.  From a technical perspective we can expect to see a breach of the USD1.4000 level in due course and the meeting on Wednesday may well trigger a break above the high of earlier in Oct at USD1.4159.  Any clearance at this level will then provide a solid platform of support which should see the euro vs dollar climb to re-test the USD1.4257 region and thereafter the USD1.4480 level last seen in early 2010.  The longer term weekly chart supports this analysis as the price continues to hold above all four moving averages here.

EU “haircut” rattles bondholders

Euro vs Dollar 20 Oct 2010

An interesting couple of days for the euro vs dollar which promptly fell heavily yesterday partly as a result of a surprise announcement from China of a hike in interest rates, which surprised the markets as this was an unscheduled move, with commodities in particular selling off sharply as the dollar strengthened.  As I suggested in one of my posts this morning the status quo would be resumed very quickly given that this was hardly a sentiment changing item of news and the only reason for the market’s reaction was a knee jerk response to an unexpected item of news.  It was therefore no surprise to see markets bounce back today and a return to the prevailing trend which has no doubt many retail traders unawares who are now short the euro vs dollar when they should still be long.  From a technical perspective today’s wide spread up candle has negated that of yesterday as the pair have recovered all of Monday’s lost ground and now hold above all four moving averages once again.  The underlying sentiment for the US still remains firmly bearish and the longer term trend for the euro vs dollar bullish and, as such, we can expect to see a break and hold above the high of last week at USD1.4159 which will then provide a further platform of support for an additional rise in the euro dollar.

Over the next few days we can expect to see a test to the underside of resistance at USD1.4217 and providing the downwards momentum for the dollar continues, we should see a test of the USD1.4579 region and longer term a move towards USD1.5140 in due course.

This week’s fundamental news for the euro vs dollar includes the weekly unemployment claims in the US tomorrow along with the Philly Fed and with the unemployment claims unlikely to change much there is little prospect of any help for the US dollar this week.  Friday’s sees the release of the German Ifo business climate index which is expected to remain largely flat at 106.5 before the market focuses on the G20 over the weekend.

India warns on damage from G20 tensions

Euro vs Dollar 18 Oct 2010

The daily chart for the euro vs dollar has thrown up some interesting signals in the last few days, not least of which was Friday’s deep shooting star candle which replicated the smaller version that we saw on Thursday, and as such, gives us a strong indication that we are likely to see a retracement from the recent bullish trend in the euro vs dollar.  Indeed so far this morning the euro vs dollar has traded lower, moving from an initial USD1.3954 to currently trade at USD1.3892, having touched an intra day low of USD1.3830.  It is interesting to note that the 14 day average has already provided support to this morning’s price action resulting in a bounce higher and for any further development of this short term reversal we need to see a break and hold below the 14 day average.  If this indeed does occur later in the week then we could see the euro vs usd push lower towards a test of the USD1.36 area but the longer term outlook still remains firmly bullish for the pair so we expect this move to be a temporary one.  This analysis should also be read in conjunction with the usd index chart which has a long leg doji candle on the weekly chart, which in itself suggests a potential turning point, coupled with a hammer candle on the daily, which again is signalling a reversal higher.  With little in the way of fundamental news today, other than the TIC Long Term Purchases in the US, which are forecast to come in below last month’s 61.2bn, to come in at 47.5bn, we will have to wait for later in the week when we have a slew of news which will give us a better idea for the next price phase for the euro vs dollar.

Both China & US at fault in currency way

Euro vs Dollar 15 Oct 2010

The technical picture for the euro vs dollar remains firmly bullish as continued and systemic from the US currency propels the euro higher, rather than from any positive eurozone news or sentiment.  Indeed this is a feature that we are likely to see over the coming weeks as the FED’s policy on QE2 really gets into its stride and the printing presses begin to roll.  We may even see some further light shed on this subject this afternoon with Fed Chairman Ben Bernanke due to deliver a speech “Monetary Policy Objectives & Tools in a Low Inflation Environment” at the Federal Reserve Bank in Boston – you couldn’t find a bigger red, neon arrow pointing the way even if you tried!!

From a technical perspective yesterday’s price action resulted in a narrow spread up candle with a deep wick to the upper body which hinted at a possible minor retracement for the pair, but so far in this morning’s early trading session, the pair has continued higher to trade at time of writing at USD1.4075, having breached the USD1.41 level earlier at USD1.4113.  The 9 day moving average continues to provide excellent support to moves on the daily chart and with the 14 day also providing a strong platform the upwards momentum remains strong.  This is further confirmed by the 40 day moving average which has now crossed above the 200 day, adding further weight to this analysis.  On the weekly chart the picture is equally positive with the euro vs dollar having breached the 200 week average and both the 9 and 14 week ma’s now crossing above the 40 week.  As such we are now set to test resistance at USD1.4336 and any break above here will test the underside of the USD1.4579 level and once QE2 begins to roll, expect to see a test of the USD1.5145 of late 2009.

The only significant items of fundamental news today, aside from the speech from Ben Bernanke, include core CPI, core retail sales, retail sales and the UoM consumer sentiment in the US.  So a busy afternoon for all the markets.

Dollar falls sparks stability warning

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