The EUR USD closed below 1.40 for the week,taking the air out of some analyst forecasts for a move to 1.45. The outsidemove closing price reversal top could also be indicative of the start of asubstantial correction.
The EUR USD closed below 1.40 for the week, taking the airout of some analyst forecasts for a move to 1.45. The outside move closingprice reversal top could also be indicative of the start of a substantialcorrection. It all depends if there is follow-through selling next week and ifthe market can hold the last swing bottom on the daily chart at 1.3775.
This week’s rally through the last swing top at 1.4028 toFriday’s high at 1.4159 appeared labored. At times it seemed traders weretentative about going long at such a lofty level. In addition, much of the moveseemed driven by a comment from the ECB’s Axel Weber calling for an end to thecentral bank’s asset buyback program rather than sound economic reasons.
Although the weakness started early in the U.S. session,Federal Reserve Chairman Ben Bernanke didn’t help matters much when he failedto clarify the Fed’s quantitative easing plan.
Bernanke gave a speech on Friday which failed to give tradersthe clarity they needed to continue to pressure the Dollar. Some feel thatBernanke may be lacking the consensus he needs to implement the QE program thathe feels is necessary to revive the economy.
Technically a break through the last swing bottom at 1.3775will turn the main trend down on the daily chart. The main trend indicatorturned long on September 1. Besides turning the main trend to down, a breakthrough this level may be setting up for a 50% correction of the 1.2587 to1.4159 range to 1.3373.