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Euros To Pounds Today – January 29th 2009

The down candle duly arrived yesterday as we hoped for on the $uros to poundsrong> currency pair, and at the same time penetrated the 9 day moving average, thereby adding some weight to the move. The strategy for today is exactly the same with small short positions the order of the day for intra day and scalping trades. The longer term view is still bearish, as I believe the euro is over bought, despite what you may read in the press regarding the possibility of it achieving parity with the UK pound in the near future. With the head and shoulders formation and the overbought aspect we should expect to see the pair fall further in due course, but for this move to be sustained we need to see the support level of 0.8950 breached. If the 14 day average is penetrated in the next few days then this will confirm the move lower. The $undamental news later in the US can be found at the euro to dollar site, with little important data being released in Europe today, other than German Unemployment Change which came in over forecast at 56,000 against a forecast of 32,000 and a previous of 33,000. Although it is often considered a lagging indicator, it can often provide early clues to the future economic health of the economy as consumer spending is highly correlated with the jobs market. If the actual is less than forecast then this is generally good news for the home currency.

The short term outlook is bearish, the medium term is sideways and the long term is bearish.