Panic pushes the EUR/USD off the support line
Posted on October 27, 2009 by Yohay
Filed Under Forex News | 17 Comments
The CB Consumer Confidence was far worse than expected, triggering a jump in the dollar across the board. Risk aversion is back in town, raising the “safe haven” currency from the floor.
CB Consumer Confidence scored 47.7 points, much less than 53.7 that was expected, and also less than last month’s 53.4 score. Against all expectations, consumers are not very confident. This is a change of the rising trend that this index enjoyed.
This lack of confidence caused a small panic in the forex markets. The dollar, being the “safe haven” currency in this global crisis, gained a lot. A bad economic indicator means dollar strength – the wonders of the risk factor. Some currencies lost more and others lost less. The Euro took it badly.
EUR/USD dropped from 1.4850, to 1.4787 very fast, with a gap in the graph. After the initial shock, it retraced back upwards, now at 1.4812. It broke the support line of 1.4842, which worked a few weeks ago as a support line. The release of the CB Consumer Confidence took made it fall from the cliff.
The dollar’s correction already began yesterday, a little after the stock markets opened in the US. Roubini’s scary words, and the uncertainty of the recovery made the dollar retrace some of its losses in the recent period.
Today’s figure is a setback to hopes of recovery, and especially a shock to the Euro.
Further reading:
- Casey Stubbs on the EUR/USD correction – an excellent technical analysis.
- EUR/USD Forecast – see additional support and resistance lines, and events in Europe.
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