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Forex Daily Outlook

As we expected, the dollar stayed on track and made further gains, especially after US consumer confidence was released worse than expected. The euro found support at 1.4780, the cable managed to gain a bit of ground to close at 1.6370 after bouncing off 1.6244 and a lot of cross related buying against the euro, Yen rallied to fall below 92, and the Suisse continued to test the 1.0225 level, closing just under. We are still bullish on more dollar gains in the very short term except for the Yen, but we expect a bounce and more dollar losses to come in the mid-long term. Everything right now depends on risk appetite. If equity markets continue to decline, the dollar will gain ground; if equity markets stay at these levels or go higher, the dollar will continue to lose ground. Even Fed comments about a strong dollar policy aren’t helping the buck.

Euro to 1.5250 - Economic Data Pending

EUR/USD - Equidistant Channel

With a lot of economic data out of the EU pending, if all looks good, we will most likely see 1.5250 before the weekend. With the euro stalling at 1.5050, we need a push higher otherwise we may see euro bulls pull out of the trend.

Forex Daily Outlook

The Euro held on to the 1.50 level very well, bouncing off the 1.4950 level as we predicted in yesterday’s update. The close above 1.50 is important and we are placing even more significance if it closes above 1.5050 today. Fed governor of Boston made some pretty heavy statements about the dollar and blamed the weakness on fundamentals. He also reiterated that the Fed’s dual mandate covers inflation and unemployment; this means that even though they support a strong dollar policy, it is unlikely they will do anything about it until a recovery is for certain.

EUR/USD Long

EUR/USD 5m Chart - Breaking the Wedge

The euro finally broke above the wedge I was monitoring. A close above 1.50 today and Friday will confirm a move towards 1.5220 and possibly higher.

Daily Forex Outlook- October 22

video URL - http://www.youtube.com/watch?v=WGigSIA_Vcc

The euro finally cracked the 1.50 mark, but stalled just under 1.5050. We expect a continuation north, but are likely to see dips as low as 1.4950. The market is going to be careful testing the waters higher as we can all recall what happened last time, a sharp move to 1.60 before melting down in the following months into the 1.20 zone. The only difference today are the economics. There are good reasons for both scenarios, the US deficits are growing and there is no sign of improvement; the Euro zone is also vulnerable due to many member countries falling below the Copenhagen criteria, which sets conditions of entry for states waiting to join. I wouldn’t be surprised to see a head and shoulders pattern before a reversal lower. The Pound stood out as the winner yesterday following a release of the Bank of England Minutes as traders rushed to cover their short positions.

Euro Fib

The Euro Fibs are drawn on the 1H chart. Breaking higher will definitely break 1.50, breaking below 1.4820 opens more downside.