The dollar recovered all of its losses from yesterday and is trading excellently at the moment. The same can’t be said regarding the Euro which now hit new lows after it surrendered all of its gains from yesterday during today’s early afternoon period. The announcement of mid-term election results in the US saw a change in Congress, with the Republicans achieving victory. The dollar subsequently rose against almost all major currencies post these results and many analysts believe that this will be absolutely vital to the dollar going forward.
Traders should now shift their focus to the European Central Bank meeting scheduled for Thursday, as many economists assume that the ECB would introduce its own version of Quantitative Easing in order to support a stagnating Eurozone economy. This should prove to be disastrous for the Euro, as many analysts feel that it will descend to record lows. Furthermore, the U.S. NFP report, slated for release on Friday should additionally be closely observed in order to understand the underlying strength of the US labour markets, along with the future policy stance of the Federal Reserve.
When looking at the hourly chart for the EUR/USD, the currency pair broke below its 100-day moving average of $1.25506 and breached its support line of $1.25445. It’s interesting to note that the EUR/USD is almost at its two year low of $1.24720. Meanwhile, the momentum indicators for the EUR/USD, are giving a sell signal. Additionally, the relative strength index is forming a lower-high, which happens to be a bearish indicator. Lastly, the next level of support for the EUR/USD is situated at the $1.24370 mark.
Short EUR/USD at current levels for a short term target at $1.24280, with a strict stop loss at $1.25445