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Euro dollar consolidates its losses in a lower range. While many European countries are on holiday, the uncertainty about Greece weighs on peripheral bonds, including Spain. Here’s a quick update on technicals, fundamentals and what’s going on in the markets.

EUR/USD Technicals

  • Asian session: The pair dipped to 1.4318 before climbing back to resistance and settling in range.
  • Current range 1.4282 – 1.4375

EUR USD Chart June 13 2011

  • Further levels in both directions: Below 1.4282 1.4160, 1.4030, 1.3950, 1.3860.
  • Above:  1.4375, 1.4450, 1.4550, 1.47, 1.4775, and 1.4882.
  • The old peak of 1.4282 is important support with the critical 1.4030 still in the distance.
  • 1.4375 is only minor resistance before 1.4450.

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

EUR/USD Fundamentals

  • 14:00 ECB president Jean-Claude Trichet talks.

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

EUR/USD Sentiment

  • German banks ready to contribute: Over the weekend, it seems that pressure for restructuring of Greek debt pushed the German banks to volunteer to participate in Greek losses. This joins approval from Jean-Claude Juncker to the German plan and a comment made by a senior German adviser that a Greek default could be weathered. The ECB is cornered.
  • 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 continued. We’ll get more of Trichet now.
  • Contagion risks in Ireland: 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. An Irish minister saw “benefits” for Ireland in the German plan.
  • Contagion risks in Spain: As the new governors and mayors begin working after the local elections on May 22nd, the worries about Greece send Spanish bonds to test the peak levels. 10 year notes now yield above 5.5%, after a calm month. The critical level is 5.60%.  The new authorities might reveal a  huge pile of hidden debt

FXCM Speculative Sentiment Index shows smaller gains for the euro: 56% are short, down from 54% beforehand. According to this contrarian index, this shows a weaker recovery for EUR/USD.