Dollar continues to slide on QE2 announcement

Quote of the day: The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. – John Maynard Keynes

EURUSD

Trading strategy: long at 1.4050 on potential pullback, stop at 1.3980(0.5% risk), 1st objective at 1.4100, 2nd objective at 1.4200.

Now that the “big day” has come and gone, we know that the Fed announced to purchase an additional $600 billion of longer-term Treasury securities by the end of the 2nd quarter of 2011. The dollar collapsed on the news and the euro rallied to almost $1.4200, from 14050, in a matter of minutes. As said yesterday, buying on break above 1.4050 would have been a good plan. Today’s ECB rate decision is also a major event in the economic calendar along with US Initial Jobless Claims and Nonfarm Productivity. Resistance around 1.4160 is still intact but the ‘good news’ for the bulls is that former resistance at 1.4050 should now provide support if price pulls back from current trading levels – at 1.4120. In case of break higher past 1.4160 barrier, next objective comes at 1.4300 – yearly open. Current exchange rate is 1.4123 @06:33 GMT

Support: 1.4050, 1.3990/00, 1.3900, 1.3850/60 and 1.3800 Resistance: 1.4150/60, 1.4170/00 and 1.4300 Market sentiment: long term – mixed, medium term – bullish, short term – bullish, intra-day – bullish

EURUSD 4hrs chart 11-4-2010