Dollar falls across the board

After the European Central Bank and the Bank of England rate cuts yesterday  (which went by with no special surprises) ,the market found the right time to correct back some of the dollar’s recent gains.

As i was mentioning  a few posts back,  technically, EURUSD does have some room to correct upwards. Seeing the pair trading around 1.25 at the bottom of it’s range with not enough selling pressure to break lower,  increased the chances for a correction. The correction took place despite and on top of the terrible day on wall street  Thursday.

We have already learned all about bad stock performance and the way they  stimulate risk aversion by rising the demand for safe haven dollar and yen. However, this did not take place yesterday, but rather the opposite did.

Maybe this is a first sign, telling us to stop paying too much attention to the fundamentals, and start diverting a bit of it back to the technical analysis side. If so, then this is certainly a good sign.

EURUSD short term view : should the pair close this week above 1.2670,  it could support the continuation of the current up-move, targeting 1.28 and more.  Even so, watch out from Monday’s opening, if the selling pressure is back in control during the first hours of trading, and no buying pressure is back during the London session, this could mean a possible move back to the 1.25 area.

Z.Georgi

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