EUR/USD Analysis: Dollar Holds Steady Against Euro

NEW YORK (Forex News Now) – In trading today, the dollar managed to pick up against the euro, which has encountered technical resistance and has struggled so far to stay above the $1.40 barrier.

The downward move in EUR/USD is most likely attributable to investor wariness over what the Federal Open Market Committee will decide in its November meeting.  The uncertainty of the effects quantitative easing will have has pushed many investors away from making big moves either for or against the dollar –with a slight hedge in the dollar’s favor.

While the FOMC has announced its intention, more or less, to initiate some form of QE for the American economy, no one outside of the Federal Reserve is exactly sure what will happen over the next two weeks.  A preliminary report leaked last week suggests that the FOMC will announce a $500 billion buying package, significantly less than the $1 trillion package that was estimated earlier by analysts.

Still, there is the debate over whether or not the news is already priced into the dollar – which means that the dollar may not dip nearly as much as expected immediately after the announcement.

Due to the uncertainty, the euro has struggled to maintain any staying power above $1.40.  Some analysts see this failure to penetrate and stay above the technical level a temporary phenomenon.

“We still expect will be the next move; however, if it is unable to do so soon, we might see some temporary weakness before markets have enough conviction to push it above this level,” said Camilla Sutton, the chief currency strategist at Scotia Capital in Toronto.

Key marks eyed by analysts for EUR/USD analysis include the 1.4442 barrier, which is the 78.6% retracement of the drop from a 1.5141 high in November, 2009 to a 1.1876 low in June of this year.  First, though, analysts and traders are eyeing EUR/USD to see if it has the strength to push above 1.40 this week ahead of the FOMC announcement next week.

Chances are, the dollar will continue to hold steady against the euro until the FOMC makes its intentions clear.