euro vs dollar daily candle chart 28th July 2009

euro vs dollar daily candle chart 28th July 2009

The 1.43 price handle seems to be taking on more significance with each passing day, as the euro vs dollar pair once again failed to clear this solid  barrier, which is now becoming something of an insurmountable wall. Yesterday’s candle closed the session with an up bar, but with a deep upper shadow and with the high of the day falling just short of the 1.43 level. This price action seems to have been repeated once again today as the US markets open, with an attempt to rise having been thwarted once again, and the question remains, will this level be breached, or will we see a sharp pullback following such a prolonged period of failure. This is much the same technical picture as we are seeing in cable, with an extended period of sideways consolidation, which is now suggesting structural instability in the daily candle chart. For any sustained breakout higher we need to see this level cleared, and this should then provide a substantial platform for a move higher. However, should the move falter and reverse, only a breach of the 1.38 level will confirm that US dollar strength is returning in the currency pair. This seems unlikely at present given the technical picture in the Dollar Index, which still remains heavily bearish.

With no fundamental news in Europe this morning on the economic calendar, the main items are later today in the US, with the CB consumer confidence index, followed by a series of speeches and recorded interviews by various ‘heavyweights’ including Geithner, Bernanke and Yellan. It seems unlikely that this afternoon will provide anything other than the usual short term volatility to the currency markets. What is actually needed is a dramatic shift in investor risk appetite, and a consequent strong move in equities and currency markets to break the current malaise.

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