Thread: Dollar Rally Continue?

Dollar Rally Continue?

We went right to the point on Tuesday where resistance would kick in, 1.4770-1.4780, and it went right to 1.4780 but could not get above. This has set up a bearish formation on the short term charts. Unless that resistance area is taken out, and ultimately 1.4900, the eur/usd is in correction.

That of course does not mean there can't be a move higher...there can, and it may still fall short of 1.4900. Movement above 1.4780 is likely to target 1.4820, 1.4840 (both of these are minor resistance points) and if it continues then 1.4860. Movement above this point will run at the former swing highs at 1.4890-1.4900.

Short-term trend is down and first minor support comes in at 1.4720 with a drop below targeting 1.4700. No real confirmation of a further decline comes until the rate moves below 1.4660. This would target 1.4625 followed by 1.4600-1.4580. 1.4560 and 1.4530 provide support beyond if the pair continues to fall.

Trade Balance and Unemployment Claims due of the US at 13:30 GMT.

Forex trading analysis written by Cory Mitchell, CMT for Forexpros.

The Australian and New Zealand dollars rose sharply on Thursday on growing expectations of higher interest rates, while concerns over fiscal health in Greece and Spain kept the euro weak versus the dollar.

Strong Australian jobs data fuelled anticipation that rates will rise further in Australia and the Reserve Bank of New Zealand signalled its rates may rise sooner than thought.

The euro steadied against the dollar, close to lows hit on Wednesday, as sentiment towards the currency stayed negative after ratings agencies highlighted the troubles facing some euro zone countries. Standard & Poor's cut Spain's credit outlook to negative on Wednesday after Fitch had downgraded Greece's credit rating, sparking concerns about selected sovereign debt.

"The euro has probably taken a bit of a hit from these internal problems in the euro zone," said Johan Javeus, currency strategist at SEB in Stockholm.

He said these problems may be sparking renewed concerns among some non-European investors about the potential for the euro zone to break up, although most still see this as extremely unlikely.

Speaking on Thursday, ECB Governing Council member Ewald Nowotny said the current worries about Greece's finances would not split the euro zone

The euro was steady against the dollar at $1.4728, not far from a low of $1.4667 hit on Tuesday according to Reuters data, its weakest since early November.

Traders said the euro was likely to see support above its 100-day moving average around $1.4630. Gains on equity markets also helped the euro off its lows. European shares were up 0.8%.