The Dollar Showed Mixed Signals Around its 50 Day Moving Average

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The Dollar Showed Mixed Signals Around its 50 Day Moving Average

Post  harpal1980 on Tue Dec 08, 2009 9:30 am

The Dollar followed Friday’s trading day and continued higher throughout yesterday’ session. Even though during the start of the session, the Greenback presented minor weakness, Bernanke’s mixed speech helped to drive the Dollar to higher ground.

In a speech before the Economic Club of Washington D.C, Fed chairman Ben Bernanke hinted that interest rates should stay at low levels for an extended period of time. The Fed Chairman commented on the recent recovery, mentioning that that even though the U.S economy is slowly bouncing back, it still has various obstacles to overcome, ones which could weigh on the current recovery, causing slow economic growth. In addition, Bernanke touched on the financial situation, stating that their remains credit problems under the surface.

Even though the statement was full of mixed signals, regarding the economic outlook and bank’s future policies, investors preferred to grab the low value of the Dollar and drive it higher. From a technical point of view the Dollar index shot through its recent trend line resistance level, but lost its steam towards the end of the session. The Dollar index formed a doji candle stick yesterday and is now trading around recent trend line resistance and its 50 day moving average - a level that has proven to also act as resistance in the past.



Most of the individual pairs also presented a mixed session as the current technical levels had more of an effect than fundamental data. The GBP/USD presented a lackluster session despite headlines showing that the U.K could be the first G10 country to have a full-blown debt crisis and may lose its AAA debt rating next year after elections. Over in the Euro-zone, Germany’s Factory Orders dropped severely by -2.1% compared to its last positive figure of 1.3%. Economists were expecting a mild improvement and not a negative figure. In addition the Sentix Investors Confidence Index, showed a negative -5.5 figure, compared to an expected -4.00. The EUR/USD lost further ground throughout the trading day but managed to find support after bouncing off of technical support of $1.4830.

Read the full article at Dodjit.com

harpal1980

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