Tuesday, 17 Aug 2010

Forex Update: EUR/USD Set for Bullish Movement

The euro rose against the US dollar today, coming off 7-week lows against the yen as well. This movement was helped as solid results at Irish and Spanish bond auctions alleviated concerns about heavily indebted euro zone countries.

But the euro struggled to hold above 1.2900 against the USD on uneasiness about the economic outlook, with a key German survey causing concerns about whether Europe's largest economy can sustain a solid recovery. The German ZEW institute's measure of investor sentiment dropped well below forecasts.

On the technical side, however, analysts are now pointing to the development of an inverse head-and-shoulders formation on the short-term charts. The EUR/USD 2-Hour chart below illustrates this point, highlighting an anticipated retracement recovery of the EUR against its American counterpart.