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Euro dollar  fell to its lowest level since mid-March, as US  Non-Farm Payrolls were well below market forecast, and  Chinese inflation was higher than expected.  Europeans banks are enjoying a spring holiday today, and there  are no expected economic data releases  coming out  of  the US. However, the markets will be paying careful attention to a speech by US Fed Chairman Bernanke today, especially after the strong impact that last week’s release of the March FOMC meeting minutes had, and continues to have,  on the international currency markets.

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

EUR/USD Technicals

  • Asian session:  EUR/USD dropped to a low of 1.3034 during the Asian trading session; the pair consolidated at 1.3059. The pair has recovered slightly in  the European session,  trading at 1.3075.  
  • Current range: 1.30 to 1.3080.    
  • Further levels in both directions: Below: 1.2945, 1.2873, 1.2760, 1.2660 and 1.2623.
  • Above: 1.3110, 1.3165, 1.3212, 1.33, 1.3360, 1.3437, 1.3486, 1.3550 and 1.3615.
  • 1.3080 proved to be a distinctive line separating ranges – once broken to the downside, it immediately switched to resistance.
  • 1.30 used to be a round number without technical strength, but the recent challenge showed it is a serious barrier. So, the pair is in a tight, strong range.

Euro/Dollar is  down following  the poor NFP numbers  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 23:15 Fed Chairman Bernanke Speaks

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

EUR/USD Sentiment

  • Non-Farm Payrolls Disappoint: US Non-Farm Employment Change was a major disappointment, as only 120K non-farm jobs were  created  in March.  This was  well below the market forecast of a  gain of   207K, and the lowest figures since December 2011. On a slightly positive note, the US unemployment rate inched down in March, to 8.2%.
  • Spanish worries: Spain had a very disappointing bond auction, reversing the success it had earlier in the year, when the LTRO was in play. This joined a minus comment by Citigroup chief economist said that the chance of a Spanish default is now higher.. Europe remains very fragile.
  • Greek foreign law bond deadline extended: Thought that the Greece will be out of the limelight for long? Think again. The holders of foreign law (mostly English-law) bonds refuse to accept the bond swap, and there’s no way Greece can force them to. The Hellenic Republic extended the deadline to April 20th, but the actual deadline is May 15th, when it needs to pay out. Any additional payment will stress the Greek government during an election period, and will complicate the tight calculations for its recovery. Greece didn’t declare bankruptcy on March 23rd, but this danger looms during the long Easter holiday, as well as every weekend until May 15th.
  • Chinese  CPI Jumps: Chinese inflation  shot up  3.6% last month, above the market forecast of 3.3%. Given the size of the Chinese economy, any unexpected figures of important economic data, such as inflation, can affect the direction of the major currencies.
  • FOMC Dampens Likelihood of Interest Rate Hike: The fallout continues in the currency markets following the release of the  FOMC March meeting minutes indicated that the Fed will not launch a further round of QE. The euro has fallen over 1% against the dollar since the FOMC release.