Forex Investment and Currency Trading

While the USD retains downside risk during the months ahead, there are increasing risks associated with the EUR. Euro zone economic data have turned mixed, with talk of a possible fall in German real GDP in 2Q 2008. Against this backdrop it is not surprising that EUR/USD continues to struggle for clear direction, with a narrowing trading range over the year. Earlier today EUR/USD traded modestly above its 55-day moving average (1.5618) but has not been able to close above this key measure since June 6. The trading ranges continue to narrow, with trend-line support at 1.5286, trend-line resistance at 1.5786 and a midpoint at 1.5536. Just below the lower end of the current trading range, at 1.5283, is a triple bottom, a close below which would argue for a major correction to just below 1.50. Given our expectation for renewed concerns about the US economy and financial sector during the weeks ahead, our expectation favors a close above the 55-day MA 1.5618 followed by a test of top-side resistance near 1.58. Conversely, a close below 1.5283 would suggest the EUR/USD bull-run is complete with a potential to trade below 1.50 for the first time since February 27.
EUR/USD Trading A Narrowing Range…Upside Still Favored