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EUR/USD  is heading lower towards 1.33 in the wake of the new week. This continues the U-turn that began on Friday, after the pair failed to break higher. Speculation about a third bailout for Greece after the German elections is weighing on the pair. Will this turn into an avalanche in the middle of the summer?

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

  • Asian session: Euro/dollar traded quietly under the 1.3350 line, and continued lower in the European session..

Current range: 1.33 to 1.3350.

Further levels in both directions:  EURUSD Technical Analysis August 12 2013 foreign exchange trading currencies

  • Below: 1.33, 1.3255, 1.3175, 1.31, 1.3050 and 1.30.
  • Above: 1.33, 1.3350, 1.3415, 1.3480 and 1.3520.
  • 1.3255 is providing weak support. 1.31 is stronger.
  • 1.3415, the June peak is now strong resistance just above the round 1.34.

EUR/USD Fundamentals

  • 18:00 US  Federal Budget Balance. Expected deficit of 95 billion.

For more events and lines, see the  Euro to dollar forecast.

EUR/USD Sentiment

  • Third Greek Bailout?: According to a report in Der Spiegel quoting the German Bundesbank, Greece will need a third bailout program in 2014. This is hardly surprising given the IMF warnings and the 64% youth unemployment in the debt struck country, but the timing is sensitive: elections are coming in Germany on September 22nd.
  • Strong German data: Germany enjoyed a rise of 2.4% in industrial output during June, better than 0.3% expected. The GDP expectations are now very high. But can Germany pull the euro-zone out of recession? This is still very questionable. We will get various GDP numbers on Wednesday.
  • Septaper seems closer: A usually dovish FOMC member, Charles Evans, made remarks showing that QE tapering is certainly on the cards for September. This is certainly dollar positive. Also Fisher said that the “Fed is likely to taper in September”, but he is a known hawk. This comes after the Fed made no real policy changes and after Bernanke said that  the Fed is not on a “preset course”. Is tapering already priced in?
  • Lower volume: We are already deep into August, and trading volume has fallen. Adding the light calendar, movements could be somewhat surprising.

More technical analysis: