Home EUR/USD Oct. 5 – Rally Finds Limits

EUR/USD Oct. 5 – Rally Finds Limits

Euro dollar  is trading in a narrow range after a strong rally yesterday. The optimism about bank recapitalization and the  new found  Greek cash fades as economic data provides a reality check. We have important figures in the US today, data that will provide significant hints towards the Non-Farm Payrolls.

Here’s a quick update on technicals, fundamentals and what’s going on in the markets.

EUR/USD Technicals

  • Asian session: An active session saw an unwinding of the rally. The pair lost some ground and stabilized above 1.3285.
  • Current range: 1.3285 to 1.3360EUR USD Chart October 5 2011
  • Further levels in both directions: Below  1.3285, 1.3225, 1.3145, 1.3080, 1.30, 1.2873, 1.25.
  • Above:   1.3360, 1.3430, 1.35, 1.3550, 1.3630, 1.37,
  • 1.3145 is the fresh low, but only a stepping stone. Very strong support is only at 1.2873, the YTD low.
  • 1.3360, which was the gap line, proved to be an important cap.

Euro/Dollar in fresh lows  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 8:00 Euro-zone  Final Services PMI. Exp. 49.1. Actual 48.8. Lowest since April 2009.
  • 9:00 Euro-zone  Retail Sales. Exp. -0.2%. Actual -0.3%.
  • 9:00 Euro-zone  Final GDP. Exp. +0.2%. Actual +0.2%.
  • 11:30 US  Challenger Job Cuts.
  • 12:15 US ADP Non-Farm Payrolls. Exp. +76K.
  • 14:00 US  ISM Non-Manufacturing PMI. Exp. 53 points. See how to trade this important event with EUR/USD.

* All times are GMT.

For more events later in the week, see the Euro to dollar forecast

EUR/USD Sentiment

  • Bank aid on the way: According to a report last night, the EU is finally working on a plan to recapitalize European banks. This comes after Dexia (French-Belgian) needed help from the governments, and will be split into a good bank and a bad bank. There was talk that 21 banks would need aid. This is a complete reversal of the wonderful results of the stress tests made in July. Yes, also Dexia passed them very nicely.
  • Greek has money!: After the decision about the next tranche of aid was delayed until November, Greek “discovered” that it has money until then. But in the meantime, a general strike was declared in Greece. This includes airports, which are paralyzed. The theory of a Greek default at the beginning of November  sounds more real, and by then, banks will be ready
  • Italy downgraded 3 notches: A downgrade was expected, but three notches and a warning of “substantially lower levels of rating” in the future was a serious blow, that hid under the optimism about the banks. Portugal’s rating was unchanged by S&P. Here are more headlines from yesterday.
  • Important NFP signs: While the focus remains  on the European debt crisis, US Manufacturing PMI provided a small upwards surprise. It included an upbeat employment component, which is a positive sign for Friday’s Non-Farm Payrolls. Today’s services sector report is even more important. The ADP report should be taken with a grain of salt.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.