After yesterday’s (July 2nd) losses, EUR/USD is fluctuating, trading close to the 1.26 line. Last week’s euphoria has quickly given way to market uncertainty as to whether the new measures outlined at the European Summit will resolve the crippling debt crisis. Attention is now shifting to the ECB. There are growing expectations (and hopes) for a rate cut by the central bank when it meets on Thursday. Euro-zone PPI was a disappointment, contracting by 0.5% in June. There are only a few releases scheduled for today, as the US gears up for the Fourth of July holiday. Here’s an update on technicals, fundamentals and what’s going on in the markets. EUR/USD Technicals Asian session: Euro/dollar moved upwards, reaching 1.2614. The pair consolidated just under the 1.26 line, at 1.2598. In the European session, the pair continues to fluctuate above and below the 1.26 line, and was trading at 1.2591. Current range: 1.2520 to 1.2624. Further levels in both directions: Below: 1.2520, 1.2440, 1.24, 1.2330, 1.2288, and 1.22. Above: 1.2624, 1.2670, 1.2760, 1.2814 and 1.2873, 1.29 and 1.2960. Yet again, the January 2012 low of 1.2624 proved to be strong in both directions. It is currently providing weak resistance. 1.2520 is providing the pair with strong support. Euro/Dollar fluctuating close to 1.26 line – click on the graph to enlarge. EUR/USD Fundamentals 9:00 Euro-zone PPI. Exp. -0.2%. Actual -0.5%. 14:00 US Factory Orders. Exp. +0.1%. All Day: US Total Vehicle Sales. Exp. 14.0M For more events and lines, see the Euro to dollar forecast EUR/USD Sentiment After EU Summit – will euro rally continue?: In a dramatic late night effort, EU leaders agreed that the ESM will NOT have seniority over private bondholders. This will help in calming investors. Other than that, they decided on allowing the ESM bailout fund to recapitalize banks and buy bonds, but the statement is quite ambiguous. The good news for the weaker zone members is that bailout funds can now be distributed directly to banks that need help, without adding to the national debt. There are at least 5 holes in the EU Summit statement, so the rally we saw on Friday could falter later on. Cracks are already apparent in the EU announcement, as the Netherlands and Finland want to block ESM bond buying. As well, German Chancellor Merkel is facing heavy criticism for caving in at the Summit and will face a tough time selling the deal to skeptical German lawmakers. NFP Buildup: US Manufacturing PMI was very disappointing, as the key index contracted for the first time in three years. This could mean that this week’s employment releases will be weak. If these figures fall below the market forecasts, this could be further indication of a US economy in trouble, and we could see the dollar drop as a result. German economy showing weakness: The drop in retail sales joins earlier disappointments and shows that Germany is not immune. Last week’s saw a disastrous German ZEW Economic Sentiment and a rise in unemployment. With the Euro-zone in deep trouble, a sputtering German economy will throw a big wrench into any recovery plans. Spain’s trouble continue: Spanish yields continue falling after Friday’s big move and this supports the euro.There are still some uncertainties and at least 8 holes in the aid package. More details about the bailout are expected on July 9th. The Spanish government is feeling the heat, and recently passed a new law limiting cash transactions. Meanwhile, Spain’s weak housing sector received more bad news, as house prices declined by 2.8% in Q2. With the national team winning the Euro 2012 soccer tournament in style, Spaniards had something to cheer about, and spent Monday celebrating and putting their economic troubles aside for a brief time. Italy next for bailout?: Italian Prime Minister Mario Monti has asked for help from Germany and the ECB as the situation worsens. The Euro-zone’s third largest economy is also suffering from a problematic banking system. This may explode later on. The economy isn’t doing much better, as GDP is squeezing fast. Italy cannot hide behind Spain for too long. If the economy continues to deteriorate, Italy could be the next EZ member to hop onto the bailout bandwagon. Will Fed take action?: In June, the Fed decided not to introduce QE, but did announce that it would extend Operation Twist. However, with the very weak Manufacturing PMI release, QE3 cannot be discounted, and the pressure on the Federal Reserve to take action will only increase if the US economy continues to churn out weak figures. Kenny Fisher Kenny Fisher Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer. Kenny's Google Profile View All Post By Kenny Fisher EUR/USD DailyForex News Today: Daily Trading News share Read Next Trading on a Vacation? It isn’t a Vacation Yohay Elam 10 years After yesterday's (July 2nd) losses, EUR/USD is fluctuating, trading close to the 1.26 line. Last week's euphoria has quickly given way to market uncertainty as to whether the new measures outlined at the European Summit will resolve the crippling debt crisis. Attention is now shifting to the ECB. There are growing expectations (and hopes) for a rate cut by the central bank when it meets on Thursday. Euro-zone PPI was a disappointment, contracting by 0.5% in June. There are only a few releases scheduled for today, as the US gears up for the Fourth of July holiday. 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