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Daily Forex Analysis – Pounds To Dollars 3rd September 2009

Forex Technical Analysis

An interesting day for the forex market and the pounds to dollars pair yesterday, as Cable regained virtually all of the loss of the previous day, ending the trading session with a relatively wide spread up bar which closed fractionally below the 9 day moving average. With such a deep and broad resistance area now above, and with all three moving averages now adding further downwards pressure,  it seems unlikely that the pound dollar forex pair will be able to reverse the recent downwards trend in the short term, and only a break and hold above the 1.67 price level, coupled with support from all three moving averages would signal any longer term trend reversal. What seems increasingly likely is that the 1.60 price region will now play a pivotal role in the medium term rate for the pound vs dollar pair. Should this level be breached then we will almost certainly see a much deeper move, possibly to re-test support at the 1.55 price point, but alternatively should this support level remain intact, then it may provide the necessary springboard for a further attempt to move higher once again. However the gradual slow decline of the last few weeks seems more likely at present, with such moves punctuated with small rallies.

Fundamental Forex Analysis

The main fundamental news of the UK today was the release of the PMI Services Index which came in better than expected at 54.1 against a forecast of 53.9, adding to the good news which seems to be an increasing feature of all the fundamental news items both in the UK and in the US, with the US forex markets concentrating on the  Unemployment Claims and Non Manufacturing data, with the first coming in worse than expected and the second marginally better. Tomorrow of course is all about Non Farm Payroll, and the monthly circus that this creates – no doubt the dust will settle once again on Monday as the markets return to regular trading volumes after the long summer recess.

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