Following the not surprising lack of change from the FOMC, equity markets took a “sell the news” approach and drove equity markets in the US all to the negative. This late selling also pushed volatility and risk aversion up and, in turn, gave strength the the Dollar–knocking the EURUSD, AUDUSD, and NZDUSD all off highs for 2009.
The sell-off has stabilized early into Asia’s session, but we could see more volatility going into Euro and tomorrow’s US sessions. With German business news and US employment claims on tap, we should see strong movement in the EURUSD and more indication of the long-term direction of the pair and the appetite for selling the greenback–which we do expect to continue.
Daily Currency Pair Analysis
EURUSD: We are still looking to the EURUSD as our driving force for direction of this market. The pair has yet to confirm the break of important resistance with 2 day candles opening and closing above 1.4750, so we are a bit cautious, but still looking long (our Daily Limit Signal confirmed a EURUSD long position at the end of the trading day). As with yesterday, we look for a return to the 62 EMA on an H4 chart (which may meet price action around 1.4660 today).
Potential Trade: Long EURUSD
Optimal Entry: bounce off 62 EMA (H4)
Potential Stop Loss: 1.4450
Potential Take Profit: 1.4950