Dollar rate today (25/10): USD selling starts to fade; EUR/USD gains halted as markets fear ECB intervention

A look at the forex markets in late morning in London show:

• The euro to dollar exchange rate is 0.04 pct higher at 1.3806.
• The euro to pound exchange rate is 0.04 pct higher at 0.8522.

NB: All quotes here are taken from the spot markets; your bank will affix a discretionary spread to the numbers. However, an FCA-regulated independent FX provider will undercut your bank's offer, thus delivering you up to 5% more currency. Please learn more here.

As the below summary of the technical forces behind the major forex pairs shows; the EUR/USD is overwhelmingly favoured to continue advancing:

Downward momentum on the US dollar is fading

The USD downside momentum has faded since payrolls, with the USD recovering slightly against the high yielders.

"We think the lack of continued reason to sell USD has seen the downside momentum fade. US data out this afternoon could provide reasons to reinitiate USD short positions," say Lloyds Bank Research.

While decent headline durable goods are expected, Lloyds advise that they do see downside risks to the final U. of Michigan survey for October.

The initial print saw a decline in the index but given the survey was taken just over a week into the shutdown it is unlikely to reflect the full impact the government shutdown had on confidence.

"The market is expecting a marginal decline today, however we view risks are to the downside," say Lloyds.

Will the ECB act on the euro?

The euro remains the favoured major currency on the forex markets at present.

We have today already commented on the prospects of the ECB verbally intervening on the currency markets to halt a rampant euro.

We have since come across the following prediction issued by Leander Dreyer at Denmark's Jyske Bank:
"The current levels have previously marked the line in the sand for when European politicians and the ECB have focused on EUR. The ECB will hold its interest-rate meeting on 7 November.

"It is very likely that there will be comments about the currency. We saw this in February 2013, when EURUSD traded at a maximum of 137.11 and when the trade-weighted EUR was also below its current level."
Jyske advise that their 3M price target of EURUSD will be raised in their next forex forecast update.

Dreyer says he believes the ECB (or massive share price declines) is to 'save' the dollar over the next 2-3 months.

There will be no new and vital news from the US until we enter 2014.