Dollar Rebounds After Bernanke Comments
Yesterday the dollar continued a day of uncertainty with the price sitting up from the recent gains against the euro. The dollar didn’t weaken beyond the resistance level yesterday (see chart). Today we saw a strengthening for the euro sending the USD through resistance, past the 38.2% Fibonacci line.
Euro strength was halted after Federal Reserve chairman Ben Bernanke said that the US Central bank is focused on the impact of the dollar on inflation. The early euro gains were wiped out, as the dollar made a sharp gain.
“The dollar’s weakness is becoming bad for the economy, and the Fed is acknowledging that,” said Alan Ruskin. - Bloomberg
Technical Chart: EURUSD 1-hour
A look at the 1-hour technical chart for the euro/dollar shows us the sharp spike earlier today when Ben Bernanke made comments that the Fed are ‘attentive’ to the impact of the falling dollar.
After the temporary gain for the euro, we have seen the pair moving back within the falling support and resistance lines. The stochastic is touching the oversold 20 line, which, if backed up across the 30-min and 4-hour charts could give us some growth in favour of the euro. Sticking with the ‘trend is your friend’ method would mean we look for dollar growth and therefore look for sell signals.
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