The EUR/USD Tests 1.4500

The U.S. Dollar Index shorts remain undeterred. Friday's 76.20 low remain intact however the sideways movement on the intraday chart hardly screams "bull" so before entering an ill-fated entry based on the expectation of a Dollar rally, keep a few things in mind.

The U.S. Dollar Index is still trading lower on the 240 minute and daily charts with resistance waiting not only at the psychological 76.50 and 77.00 levels. Any move higher between current prices and the 78.20 level will only be corrections within the overall downtrend. A reversal of the bear can be considered above 78.50.

In the meanwhile the the backdrop of Chuck Prince's departure from Citigroup has Dollar bears thinking that the Fed will continue printing cheap money to help the banking crisis still suffering from the credit hangover. Lower interest rates are expected because of this and this ofcourse would continue to point to a weaker U.S. Dollar.

The EUR/USD will continue to rally as long as this is the expectation in the market.

This morning's action on the EUR/USD certainly reflects this as the 1.4500 was broken to the upside. The break was not sustainable at the time but the retracement was not one that would dissuade Euro bulls from pushing prices higher again. Current support waits between the 1.4450 psychological level and 1.4440. The pullback from the morning's high was supported as 1.4441. Don't underestimate the 1.4450 support level and don't be to aggressive to short the EUR/USD unless it convincingly can break the "50" pip.

The 240 minute chart continuation rising wedge pattern shows the support at the EUR/USD climbs to even rarer air as the 30 minute chart triangle breakout followed through. EUR/USD strength also points to shorting opportunities in the USD/CHF (see chart alert below).

Raghee Horner is a private forex, futures, and stock trader based in South Florida. She is the author of two best-selling forex trading books and a sought after speaker. Learn more about Raghee's charts here.

All charts presented with permission from Autochartist pattern recognition software.