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Euro dollar is breaking above resistance on new hope that an emergency meeting of European finance ministers could provide some kind of relief for Greece. Also the Chinese strengths helps. Will this last? We have major US figures later on. Here’s a quick update on technicals, fundamentals and what’s going on in the markets.

EUR/USD Technicals

  • Asian session: The pair fell to support at 1.4375 and bounced higher from there. The break higher came in the European session.
  • Current range 1.445o to 1.4550.

EUR USD Chart June 14 2011

  • Further levels in both directions: Below 1.4450, 1.4375, 1.4282 1.4160, 1.4030, 1.3950, 1.3860.
  • Above:   1.4550, 1.47, 1.4775, 1.4882 and 1.4940.
  • The old peak of 1.4282 is important support with the critical 1.4030 still in the distance.
  • The break above 1.4450 is significant and may lead to further gains.

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

EUR/USD Fundamentals

  • 12:30 US  Retail Sales. Exp. -0.2%. Core retail sales exp. +0.3%.
  • 12:30 US PPI. Exp. +0.1%. Core PPI exp. +0.2%.
  • 14:00 US  Business Inventories. Exp. +0.9%.

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

EUR/USD Sentiment

  • Greek emergency: There are reports of an emergency meeting to discuss the situation in Greece later on in the day. Private sector participation that Germany wants is gaining traction. Greek yields broke another record and S&P downgraded the nation to CCC, and warned of a default.
  • Chinese strength: The bulk of Chinese figures released earlier in the day has shown that industrial production rose by 13.3%, more than expected. Also other figures, including inflation wasn’t as bad feared. This pushes appetite for risk.
  • 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 yields remain 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: 59% are short, up from 54% beforehand. According to this contrarian index, this shows a stronger recovery for EUR/USD.