Euro dollar kicked off the week with a gap lower, but this was erased. Apparent Swiss moves to weaken EUR/CHF as well as hope that Eurobonds will be issued despite German refusal, keep the common currency higher.
Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
- Asian session: Active session sees a gap lower to support at 1.4350, before the pair jumped back in range.
- Current range 1.4350 to 1.4450.
- Further levels in both directions: Below 1.4350, 1.4282, 1.4220, 1.4160, 1.4070, 1.4030, 1.3950, 1.3838.
- Above: 1.4350, 1.4450, 1.4520, 1.4650.
- The 1.4350 to 1.4450 range characterizes trading at the moment.
- 1.4282 is significant support on the downside.
Euro/Dollar sliding lower – click on the graph to enlarge.
EUR/USD Fundamentals
- 14:00 US Mortgage Delinquencies.
* All times are GMT.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
- SNB Intervention?: The Swiss National Bank is apparently active in the markets, buying EUR/CHF in order to weaken the franc against the euro. The euro-zone is its main trade partner.
- Eurobonds? German chancellor Angela Merkel rejected eurobonds at this time in an interview. Also the French oppose it, but many European officials push for it. This seems to many as a solution for the debt crisis, although it also has its problems.
- Bernanke awaited: Tension is growing towards the speech of Ben Bernanke in Jackson Hole on Friday. Some expect him to hint about QE3 in order to stop the falls in stock markets, although this can harm the economy at this time. Stay tuned for a preview for this big event.
- European Credit Crunch: One European bank couldn’t get US dollars from other banks and had to go to the ECB and pay a higher price. In addition, US regulators are worried about European banks. Some European banks are highly leveraged, close to Lehman. Also Germany’s Commerzbank seems to be stressed.
- Terrible US data: The Philly Fed Index plunged to the lowest level since March 2009. Also other figures such as jobless claims and existing home sales were terrible. The bad US figures and the European banking worries sent global stock markets lower yesterday in Europe, then in the US, then in Asia, and now in Europe again.
- Greek bailout questioned: Finland demands collateral from Greece in order to participate in the bailout. This is causing headaches across the continent, as other countries want the same deal.
- German slowdown: After all the related figures, including PMIs, business confidence and others showed it, the overall figure showed it: Germany’s economy almost came to a full stop, growing only 0.1% in Q2. With the French economy flat, the smaller countries are pushing the wagon, with a moderate rise of 0.2%.
- Spanish bond yields remain low: The ECB continues keeping yields down. The ECB spent no less than 22 billion euros last week, and plans to drain the money out of the markets. This sterilized intervention is positive for the currency. In the long run, it will be hard to continue with it, and euro printing might be necessary. Yields are at 4.97%. Also Italian yields are kept low.
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