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Thursday, June 3, 2010

Euro/Dollar (EUR/USD) Analysis - Monthly, June, 2010

Last month the Dollar made one of its biggest gains in a month against the Euro. The trading began at May, 1st at around 1.33 and closed the month at 1.2286 with 1.2140/30 being the lowest level reached. This made almost 7.6% gain for the Dollar.

As was supposed in the current weekly technical analysis, June started with a test of the lowest level around 1.214 which was penetrated a bit to 1.2110 and a bounce followed. Now the Euro trades below its previous support level around 1.23.

The monthly graphs shows we are in a Dollar area and the Euro is deeply oversold. A warning sign for any Euro bulls would be the MACD whose histogram continues to dig deeper on the negative side.

As the support level at 1.23 was broken last month the next one (which is a major strong support) lays around 1.17/1.19 area. If the inertia from the last month proves to be strong enough, this is a possible target to reach.

Looking on the Weekly and Daily graphs we could see some signs for an upward Euro movement but even if it appears during the month, the overall trend is still negative for the Euro.

One should keep in mind that there is a possibility for a strong bullish divergence for the Euro to be formed on the monthly graph and if that happens it could signal a long (possibly years) upward trend for the Euro against the US Dollar. Still as we are looking at a very big time-frame graph it could take 1-2 months before such a divergence to appear clearly.

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