On Wednesday the 10th of January, trading on the euro closed slightly up after Bloomberg landed a blow on the dollar during the European session. The news agency reported that China is planning to reduce or stop its purchases of US government bonds.

The dollar dropped as bond yields rose due to the fact that China is the biggest holder of US debt. According to the US Treasury, China currently holds 1.189 trillion dollarsí worth of US government bonds.

The news about China sent the euro up to 1.2018 against the greenback. Since there were no official announcements from any Chinese officials, however, there was no further impetus for the dollarís decline. In the US session, the euro dropped to 1.1941.

Due to the unexpected news on China, yesterdayís predictions didnít come off. Sellers erased yesterdayís gains, bringing the exchange rate down to 1.1941. At the time of writing, the euro is trading at 1.1952.

Considering that on Wednesday, the euro/dollar rate corrected by nearly 90 degrees, and that the rate returned to the LB balance line (sma 55), for today, Iím predicting that the euro will slide against the dollar to the 112th degree at 1.1881. To trigger this decline, the bears need to break through the 1.1930 support. At the moment, the following crosses are getting in the way of this: EURJPY, EURGBP, EURCHF, and EURCAD.

If the euro continues to trade above 1.1915 up to the 15th of January, then from Monday, Iíll be expecting the euro/dollar pair to rise again.
This is forex articles provider by: Alpari