Another day and another dollar, well not quite, as the euro continues it’s recent bullish reversal higher overnight once again, fuelled by Chinese buying, and relief that the Ecofin meeting has now concluded, although precious little was agreed. The fundamental issues still remain, with the ECB now standing as the guarantor to all the weaker member states, as Germany continues to express it’s concerns over the eurobond option. At some point the euro will begin to unravel and one of these weak states will eventually leave, which may in turn cause a domino effect in due course. For the meantime however, the euro remains firmly in place, and continues to climb higher helped by Jean Claude Trichet’s comments last week concerning interest rates, with equity markets in Asia and Europe picking up the bullish tone.

From a technical perspective we are once again testing the 1.3500 area on the daily chart, and any break and hold above this level will then signal a continuation of the recent trend higher, with a run towards 1.3800 region now looking increasingly likely. Both the 9 and 14 day moving averages are now turning higher and look set to cross the 40 day moving average as a result, and should this occur by the close of trading this evening, then this will add a further bullish signal to the short term picture, as we look to the current bullish momentum developing into a longer term upwards trend. The resistance between the 1.3800 region and through to 1.400o could present a solid barrier in due course, but provided none of the EU states default in the next few weeks, then the current fundamental picture in Europe could provide the driving force for a sustained move higher for the euro.

Why not join me in one of my FREE live training rooms – I look forward to seeing you there – Anna