Forex Trade Setups Commentary: EURUSD breaks above 1.4500, 3rd June 2011

Forex Commentary:

The U.S. dollar sank on Friday and is likely to drop further in the week ahead after weak U.S. jobs data added to evidence of a marked economic slowdown. The negative sentiment in the United States contrasted with cautious optimism in the euro zone, with the euro touching a one-month high on optimism that Greece will receive its next aid payment and avoid restructuring its debt.

The greenback tumbled to an all-time low against the safe-haven Swiss franc and hit a one-month trough against the yen. While the greenback remains vulnerable to cheapening on economic weakness, the euro took out a key resistance level that could result in further gains.

The U.S. Dollar Index .DXY, which measures the dollar’s performance against a basket of major currencies, was down 0.8 percent for the week at 73.742.

Trading Setups / Chart in Focus:

EURUSD

The EURUSD broke above resistance at 1.4500 today, paving the way for a potential re-test of this year’s highs at resistance near 1.4900.

We can see in the chart below that the 8 and 21 day EMA’s have crossed higher, indicating momentum is becoming more bullish. Also, note the inside pin bar setup that formed off support near 1.4000, which preceded this recent move higher.

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Other Markets:

On Wall Street today stocks ended a fifth week of losses with more selling on the back of a worse than expected jobs report which gave weight to concerns that the economy is slowing.

The Dow lost 97.29 points, or 0.79 percent, the S&P 500 dropped 12.78 points, or 0.97 percent, and the Nasdaq lost 40.53 points, or 1.46 percent.

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