EUR/USD Feb 3 – Tense Range Trading Before ECB

EUR/USD is trading in a high range, as tension mounts towards Jean-Claude Trichet’s rate decision and as the Egyptian crisis escalates. Will it break higher on this busy day? Here’s a quick update on technicals, fundamentals and community trends.

EUR/USD Technicals

• Asian session:  Very quiet trade around 1.38.
• Current range – 1.3760 to 1.3830.

• Further levels in both directions: Below    1.37, 1.3576, 1.3440, 1.3334, 1.3267, 1.3180, 1.3080, 1.2970.
• Above: 1.3830,  1.3950, 1.4030, 1.4160 and 1.4230.
• 1.3760 turns into significant support after the breakout – it already worked as such.
• 1.40 is next big target, although resistance appears under and above this line.

Euro/Dollar manages taking a break after breakout- click on the graph to enlarge.

EUR/USD Fundamentals –

• 9:00 European Final Services PMI. Exp. 55.2. Actual 55.9 points
• 10:00 European Retail Sales. Exp. +0.6%.
• 12:45 European rate decision. Exp. Unchanged at 1%. Press conference at 13:30 will create high volatility.
• 13:30 US Unemployment Claims. Exp. 420K.
• 13:30 US Unit Labor Costs. Exp. 0.4%.
• 13:30 Non-Farm Productivity. Exp. 2.1%
• 13:30 US ISM Non-Manufacturing PMI. Exp. 57.2 points.
• 15:00 US Factory Orders. Exp. -0.2%.
• 18:00 Federal Reserve Chairman Ben Bernanke talks.

* All times are GMT.

For more events later in the week, see the  EUR/USD forecast

EUR/USD Sentiment

• Inflation is becoming problematic for Europe. This comes as employment is still high. Double trouble for Europe. Trichet showed concerns about inflation and boosted the Euro. It already reached 2.4%. Will Trichet up his tone about inflation and hint a rate hike?
• Egyptian crisis: Fresh escalation as anti-government and pro-Mubarak protesters clash violently. Is Egypt entering a civil war? There are rumors that Obama told the Egyptian army to bring Mubarak down. An escalation is positive for the dollar.
• Greek default? Plans are drawn for a making a 25% haircut on Greek debt, codenamed “Brady plan”. This has been overshadowed by the events in Egypt.
• S&P downgraded Ireland’s credit rating. Unsurprising, but a reminder that the crisis isn’t over.
• Spanish bond yields stabilized and now stand at 5.13% – still relatively low.

Currensee Community: 63% are long , 37% are short. These are 1376 open positions in real accounts trading this pair at the moment.