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Euro and Aussie dollar looking to move lower (FXE, FXA)

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The U.S. dollar has felt some pressure in recent trade against other major currencies in recent trading that can be classified as consolidation as the market looks to take a breather into the holiday week.

With Christmas just around the corner, we are anticipating a mellow day in trading in the forex market. However, with that said, today's volume is excepted to be razor-thin and it would not take a lot to move the market in either direction.

We suggest traders stay on the sidelines to avoid being a victim to possible violent intraday swings.

Looking at the fundamentals, traders are faced with some key releases in Europe that were softer than expected, such as the GDP out of France. Weak economic growth is just another sign for traders to be even more nervous about a potential French downgrade. Italian consumer confidence numbers along with weaker U.K index of services are contributing to the downward pressure.

Looking at the technicals:

The EUR/USD pair has finally broken the key October low at $1.3145 confirming a lower top by $1.3550 and opening the door for further downside towards the 2011 lows set back in January at $1.2870. Looking at the daily studies traders will find price action to be a little stretched.

The daily chart is suggesting some corrective action before the market resumes its downward movement. Traders looking for short entry points can consider looking at any rallies to sell as the rallies should be well capped at $1.3300 level where strong resentence is found.

Any rallies in the AUD/USD are considered as corrective. We continue to see AUD/USD in the process of building a major top ahead of the next downside movement below the key low from October at $0.9385.

Turning to the daily chart, traders see the latest consolidation price action has broken and it now looks like price is seeking to create a new lower top near the $1.0380 level. Traders should be on lookout for price acceleration towards the $0.9660 level.

Once the $0.9660 level has been broken the next level of support sits at the key October low of $0.9385. Only break in price back above $1.0380 would delay outlook.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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