EUR/USD June 24 – Now Dropping in Extremely Choppy

Euro dollar is now falling after Italian banks were warned by Moody’s and as doubts float about passing the austerity measures. This reverses earlier gains that came on strong business climate. We still have important events ahead. Here’s a quick update on technicals, fundamentals and what’s going on in the markets.

EUR/USD Technicals

• Asian session: Quiet session saw the pair stable under 1.4282.
• Current range 1.4160 to 1.4220.

• Further levels in both directions: Below 1.4160, 1.4030, 1.3950, 1.3860, 1.3750, 1.3440.
• Above:  1.4220,  1.4282, 1.4375, 1.4450, 1.4550 and 1.4650.
• 1.4282 is now weaker resistance, after being pierced through twice in a very short time.
• 1.4160 provides support, although stronger support is at 1.4030.

Euro/Dollar very choppy  – click on the graph to enlarge.

EUR/USD Fundamentals

• 8:00 German Ifo Business Climate. Exp. 113.6. Actual 114.5. This sent the euro significantly higher, before the fall.
  
• 12:30 US  Final GDP. Exp. +1.9%.
• 12:30 US  Durable Goods Orders. Exp. +1.6%. Core orders exp. +1%.

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

EUR/USD Sentiment

• Not enough votes for Greek austerity? There is talk that more ruling party members will not vote for the proposed austerity measures, which already have holes in them… This joins worries from the Greek prime minister, echoed by the Slovak one. The critical vote begins on Wednesday. The situation in Greece triggers concerns worldwide.
• Italian Bank Shares Trading Suspended: Moody’s warned that Italian banks will get a credit rating downgrade. This sent the shares down and triggered a suspension of trading.  Intesa and Unicredit are big banks in the European level, and this is problematic.
• No QE3: In the press conference that followed the rate decision, Ben Bernanke played down the option of another quantitative easing program. He compared the same period one year ago, and said that employment is rising faster and there is no threat of deflation now. No new dollar printing is good for the dollar.
• 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. Note that also other banks such as Belgium’s Dexia and a few French banks have also shown willingness to contribute.