Forex Commentary: EURUSD recap, 7th March 2011

Forex Commentary:

The euro struggled to make much headway early in Asia on Tuesday after its rally stalled just above $1.40 overnight, helping an oversold dollar edge off four-month lows against a basket of major currencies.

While investors have recently been more preoccupied with the prospect of an interest rate hike by the European Central Bank as early as next month, the euro zone debt crisis threatens to return to the fore.

Moody’s on Monday slashed Greece’s sovereign debt ratings by three notches and left the door open for more downgrades, worried that the country’s efforts to cut its debt will not be enough. This has added pressure on the EU to thrash out a comprehensive package to deal with the euro zone debt crisis.

The euro last traded at $1.3964 , having retreated from highs around $1.4036 on Monday. Immediate support is seen around $1.3950, the session low, and beyond that around $1.3850, the previous uptrend breakout level.

Trading Setups / Chart in Focus:

EURUSD

The EURUSD failed to push through resistance near 1.4030 today. We can see in the chart below that a small bearish rejection bar formed after price challenged this resistance level that goes back to October of last year.

We are watching support near 1.3850, should price rotate lower into this level any obvious bullish price action trading setups near this support could be solid opportunities to re-enter the overall uptrend.

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Other Markets:

On Wall Street today technology stocks sold off as the Nasdaq teeters on a key technical support level, uncertainty over higher oil prices has been a catalyst for higher volatility recently.

The Nasdaq composite index lost 1.4 percent today and close just under its 50-day moving average, a widely followed technical level.

The Dow dropped 79.85 points, or 0.66 percent, the S&P 500 lost 11.02 points, or 0.83 percent, and the Nasdaq lost 39.04 points, or 1.40 percent.

Upcoming important economic announcements: 3/8/2011

8:15am EST: Canada – Housing Starts
Tentative: Britain – BOE Gov King Speaks
7:30pm EST: Australia – Home Loans m/m