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Euro dollar continues its downfall many hours after Trichet’s press conference.The split in Europe around a solution for Greece is just huge and time is running out. In the meantime, signs of a slowdown come from Germany and France. How will the week end? Here’s a quick update on technicals, fundamentals and what’s going on in the markets.

EUR/USD Technicals

  • Asian session: A rather  session sees sees the pair rise to 1.4550 before falling lower. Drops accelerated in the wake of the European session.
  • Current range 1.4450 – 1.4550.

EUR USD chart June 10 2011

  • Further levels in both directions: Below 1.4450, 1.4375, 1.4282 1.4160, 1.4030.
  • Above:  1.4550, 1.47, 1.4775, 1.4882, 1.4940 and 1.5020.
  • 1.4450, which was a major stepping stone on the way back up, is now challneged.
  • 1.4550 is the top border of the current range.

Euro/Dollar dropping to lower support  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 6:00 German Final CPI. Exp. 0%. Actual 0%.
  • 6:00  German WPI. Exp. +0.5%. Actual 0% – less inflationary pressures.
  • 6:45  French Industrial Production. Exp. +0.4%. Actual -0.3% – Slowdown in France as well.
  • 6:50 Jean-Claude Trichet talks again.
  • 12:30 US  Import Prices. Exp. -0.6%.
  • 13:00 US FOMC member William Dudley talks.
  • 18:00 US  Federal Budget Balance. Exp.-148 billion.


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

EUR/USD Sentiment

  • Strong vigilance, but other worries: Trichet did make the expected hint for a rate hike using the code words “strong vigilance”. On the other hand, he expressed concern over the global economy, repeated the “strong dollar policy” and also continued to reject any Greek restructuring. The fall of the euro that began during the presser continues now.
  • Split over Greece widens: German finance minister Wolfgang Schaeuble insists on a “prolongation” of Greek bonds for seven years. He urged a decision on this by June 20th. The ECB strictly opposes it and Trichet said it would be an “enormous mistake”. Time is running out, as Greece will run out of money by mid July. Christine Lagarde which is the leading candidate to lead the IMF, still oppose Greek restructuring.
  • Contagion risks: There are fears in Ireland that a Greek restructuring will hammer Irish bonds, sending them to junk status and keep Ireland away from the market for too long.
  • Ben Bernanke doesn’t provide hope: The chairman of the Federal Reserve was busy answering to his critics but didn’t provide hope about the global economy. At least he didn’t talk about QE3…
  • Calls for a lower exchange rate: Jim O’Neill, of Goldman Sachs, that manages over $800 billion, says that the correct EUR/USD rate should be 1.20. And also Jean-Claude Juncker, head of the Eurogroup, talked about an overvalued euro in a discussion held in the European parliament. Also Trichet hinted he wants a lower rate.