Euro vs Dollar Chart 17 Dec 2010

An interesting week for the euro vs dollar which started the week in bullish mood, surging to USD1.34 on Monday and breaking higher again on Tuesday, only to close with a warning signal of shooting star candle which has been duly validated in the second part of the trading week.  The high of Tuesday’s price action at USD1.3498 failed to trouble the 40 day moving average which continues to point lower and add further pressure to downwards slide.  Wednesday’s price action was pivotal with a break and hold below both the 9 and 14 day moving averages with today’s price action adding yet a further layer of bearish sentiment as this week’s close is now looking set to hold below these averages.  Today’s chart has seen the euro vs dollar attempt to rally, boosted initially by better than expected German Ifo data, only for the pair to fall back on the news of a further downgrade for Ireland.  The immediate technical picture on the daily chart is now dominated by the 200 day average which currently sits at USD1.31 and the significance of this cannot be underestimated with any break and hold below signalling a deeper move to re-test the USD1.30 region and possibly on towards the initial price congestion at USD1.2919 in due course.

Euro vs Dollar Weekly Chart 17 Dec 2010

The weekly chart for the euro vs dollar would also confirm this view and here again we have a key technical level at USD1.3115 which, in this case, is the 40 week average, which in fact came to the rescue in today’s trading session.  However, with the 9 week average now crossing the 14 week giving us a bear cross signal, any breach of the 40 week average will a signal a move lower for the eurodollar and indeed with the deep shadow to the upper body of this week’s candle now clearly evident, this seems increasingly likely.

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Euro vs Dollar 29 Nov 2010

The bearish sentiment from last week towards the euro vs dollar has continued in today’s trading session with the pair pushing lower once again and now testing a potential key level of support at the 200 day moving average which currently sits at USD1.3126.  Indeed at time of writing the pair is trading at USD1.3119, hovering at this longer term moving average.  Should we see a break and hold below this indicator then we can expect to see the pair continue their recent short term downwards trend towards an initial test of support in the USD1.2888 area, followed by a potential test at the USD1.2587 level, but only if we see a break and hold below the 200 day moving average.  With the risk of contagion in the eurozone still a major factor we could yet see the euro plunge further and in these end of year, thin markets, with many traders squaring positions, trading will be both volatile and unpredictable.   The key event in last week’s trading session was Tuesday’s wide spread down candle which breached potential support in the US1.3450 area but also broke below the 9 day moving average, propelling the lower as a result.  In addition last Monday’s failure to breach the 14 day moving average to the upside also gave us a strong warning signal that the bounce to USD1.40 was unlikely to be achieved.

The main items of fundamental news for the eurozone this week are likely to be German retail sales on Wednesday which are forecast to show an improvement to 1.3% from last month’s -1.7% and on Thursday the ECB meets once again to set interest rates which are likely to remain on hold at 1%, but as always it will be the press conference that follows the announcement that will no doubt take centre stage, particularly if references are made to the ongoing bail out saga.  For the dollar the highlight comes, of course, on Friday with non farm payroll which is preceded on Wednesday by the ADP figures which are forecast to be positive at 70k, an improvement on last month’s 43k, whilst Thursday has the unemployment claims and pending home sales which are expected to remain poor.

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