Nov 12 2008
The EUR/USD Breaks Significant Support Levels
The USD saw a bullish trading session versus most of its major currency crosses yesterday. The USD took advantage of the falling Crude Oil Prices, which reached a 20-month low, and some bearishness by its counterpart currencies. Against the EUR, the USD reached its highest value in more than a week as the pair traded under the significant price barrier of 1.2500 towards the end of yesterday’s trading session. The greenback experienced similar behavior against the British Pound and Swiss Franc.
Concerns that the deepening global economic crisis will slow demand for Oil dragged prices for the commodity 5% lower, which has strengthened the American Dollar. Worries about the state of the global economy generally prompted a move into the greenback, which is widely considered a more secure currency to hold during times of uncertainty.
The question now becomes if the current Dollar “strength” will continue, despite the worrying outlook of the US economy. An optimistic Dollar trader will look at the uneasy situation with the EUR and GBP as an indicator for positive USD movement. Though there is still plenty of important US data to be released in November, the greenback has already proven it can take bad data and still make gains, as long as its major rivals are stuck in a similar predicament.
Looking ahead, the US is set for a relatively quiet news day considering the only news will be a speech delivered by Federal Open Market Committee member Donald Kohn at 16:00 and 18:00 GMT. However, with energy prices and the US stock market driving much of the financial speculation worldwide, it is safe to say that the Dollar will contribute to at least some of today’s market volatility.
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