Casey Stubbs– Winners Edge Trading
This past week was a wild ride for the Eur/Usd as the pair had more price action last week than we have seen for some time. This week ended with Euro gains for the third consecutive week.
Will the Euro continue to move against the Dollar this week?
Their are several factors to consider to help us see what is happening with this currency pair. The first factor is that despite the large moves for the Euro last week lets not forget that we are still in the midst of a strong dollar run. If you look at the daily chart the Euro stopped short of the .618 retracement level at 1.3868 and then moved back down. Which is completely normal in a down trend so we could see the Euro to drop down to the previous support level and then move right back down to new lows.
Also notice that there is a double bottom chart pattern on the daily chart that could indicate that the downward trend is over because when the pair attempted to make new lows and break the low of 1.2329 on October 26, 2008 it failed. That was a key support level that had to be broken for the Euro downside to continue.
Another factor is the FOMC decision this week was bad news for the Dollar and could have long term negative consequences for the Dollar. However, I don’t think that the FOMC does not have the power to control the Dollar long term. They can manipulate the currency for short period of time but in the end there are to many other factors that come into play. Such as how the economy responds in the future and what the ECB will do in response to the FOMC ruling. It will be a combination of many things that will ultimately determine the future of the Dollar. Lets not forget that the Dollar is still a safe haven for investors right now because of risk aversion, despite this crazy decision by the FOMC. That will not change until we see clear signals from the European economy of some economic improvement.
For the current week ahead watch the resistance level of 1.3868 if that gets broken we could see more Euro gains in the future.
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