EUR/USD – Dollar's 8-month high continues to slip away

Thursday, August 21, 2008

Yesterday, the dollar lost its 8-month peak against major currencies as investors continued to sell their positions in order to profit from the dollars latest rally. In addition, many of the investors like me are not taking any risks with the dollar in sight of the indebted mortgage giants Fannie Mae and Freddie Mac's apparent need for governmental assistance.

A combination of these factors as well as the recent rise in gold and oil prices has brought the dollar's rally to a halt. On the other hand, the rise of oil to above $116 a barrel was not as helpful to the euro and the sterling as expected, reflecting the bearish sentiment towards these currencies.

Nevertheless, the losses in the dollar were minimal in sight of a slowed growth around the world which might prompt cuts in interest rates in the world's largest economies besides the U.S.
Traders are expecting key European data later in the day in order to estimate the state of economic health of this region.

According to the Finexo currency trading room euro dropped 0.2% and stabilized at $1.4776, remaining above the 6-month low of $1.4630 hit on Tuesday. This adds up to a total of 8% fall from its July record peak of $1.6040.

EUR/USD recovers further today but still fails to take out 1.4830 resistance. Outlook remains neutral for the moment. On the upside, break of 1.4830 will confirm that a short term bottom is in place and bring stronger rebound, probably to test 1.5284 double top neckline resistance before staging another fall. On the downside, below 1.4672 minor support will flip intraday bias back to the downside and break of 1.4629 will indicate that recent decline from 1.6038 has resumed for next target of key medium term support at 1.4309.


anjali August 22, 2008 at 3:08 PM  


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Anonymous December 10, 2008 at 1:35 PM  

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