ForexPros Daily Analysis March 24, 2011
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The EUR/USD has rebounded from a day where fundamentally negativity and a resurgent U.S. Dollar pushed the pair lower to 1.4050. This push higher comes as the dollar resumes its overall bearish Directional Bias and tests 76.00 on the U.S. Dollar Index futures contract again.
As the news cycle rotates between the three main headlines for the euro - the sovereign debt crisis, strong data, and a rate hike expectation - the EUR/USD is riding a roller-coaster intraday. It should be considered however that regardless of the recent pullback, the daily EUR/USD is still in a strong uptrend.
This means that the dominant psychology (based upon the market trend) is bullish. This increases the likelihood that buyers will want to support pullbacks and use the correction as an opportunity to get long once again. It’s also then my opinion that counter-trend trades (trades that are entered in the opposite direction of the daily’s trend) should be taken only on short-term time frames such as the five, 15, or 30-minute charts.
Today begins Day 1 on the EU Economic Summit in Brussels as the sovereign debt problems has most recently be centered around the Spain downgrade and Portugal’s PM resignation Wednesday. The backdrop to this is the continued stream of solid economic data which supports Trichet’s statements earlier this month that inflation will be combated with a rate hike. The rate hike of course had to be considered a point of contention for borrowers who still see the sovereign debt problems as the larger issue.
The 15-minute time frame has transitioned into an uptrend and could be considered a trend-following entry long on pullbacks to the support of the 34EMA Wave.
Forex Trading Analysis written by Raghee Horner for ForexPros. For more information about currency charts visit ForexPros.
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