My post last night on FxStreet focused on the eurodollar for the simple reason that in the last few weeks the euro currency has all but been written off by many market commentators and analysts who have all been suggesting that the entire euro project is on the point of collapse, with Germany even returning to the D-mark. Indeed it has also been suggested that the euro may be replaced with an alternative currency which is fanciful in the extreme. As always whenever such topics hit the mainstream newswires then inevitably the reverse occurs and in the case of the euro this is exactly what happened yesterday with the euro breaking out from its recent desultory trading pattern to surge higher and break above US1.34 in yesterday’s trading session.
My analysis suggested that “looking at the shorter term moving averages, the 9 day has now crossed above the 14 day suggesting a bull cross signal, and should this be confirmed in tomorrow’s price action then we may see today’s bullish momentum carry through the remainder of the week.” A glance at the overnight and this morning’s price action has clearly confirmed this analysis with the euro vs dollar currently trading at USD1.3469 at time of writing, and also making strong gains against the British Pound with this pair firmly higher once again at 0.8484.
As outlined in yesterday’s post the key area for the medium term is now the 40 day moving average which currently sits at USD1.3603 and this may present a barrier to any further short term gains for the euro. However, if it is breached then it will add a further level of support to the present upwards recovery and we may even see a re-test of the deep price congestion which sits overhead between USD1.38 and USD1.40. To the downside the 200 day moving average appears to have provided a platform for a re-basement and consequent bounce back from the decline of late October to the end of November.
Leave a Reply