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Euro USD  is quite stable at the wake of the new week, not surrendering on lots of negative headlines during the weekend and still clinging to some hope that we will see QE3 as a result of the terrible US jobs report on Friday. Central banks on both sides of the Atlantic will impact markets later on this week, but for now, there is some relative calm, at least until the next negative headline.

Here’s an update on technicals, fundamentals and what’s going on in the markets.

EUR/USD Technicals

  • Asian session: The pair began the week with a small dip under 1.24 but returned back to range. No weekend gap was seen.
  • Current range: 1.24 to 1.2460.

EURUSD Chart June 4 2012

  • Further levels in both directions: Below: 1.24, 1.2330, 1.22, 1.2144, 1.20, 1.1876 and 1.17.
  • Above: 1.2460, 1.2587, 1.2623, 1.2660, 1.2760 and 1.2814.
  • 1.2460 emerges as a strong resistance line.
  • 1.2330 remains strong support – the dip was temporary.

Euro/Dollar  calm after NFP and before busy week – click on the graph to enlarge.

EUR/USD Fundamentals

  • 8:30 Euro-zone  Sentix Investor Confidence. Exp. -29.1 points. Actual: -28.9 points.
  • 9:00 Euro-zone PPI. Exp. +0.3%.
  • 14:00 US Factory Orders. Exp. +0.3%.

For more events and lines, see the  Euro to dollar forecast

EUR/USD Sentiment  

  • Spanish Bailout?: Reports over the weekend suggested that a bailout plan for the euro area’s fourth largest economy are in the works and that Germany is pressuring Spain to accept such a program. Spanish 10 year bond yields remain high, at around 6.50%. The report suggests a minimal package of 50 to 80 billion euros to shore up the banks.
  • Terrible Non-Farm Payrolls report: The US gained only 69K jobs in May and previous figures were revised to the downside. Also the unemployment rate is now higher – 8.2%. This casts yet another shadow on global growth. Some think that this will trigger the Fed to action, but it doesn’t seem real as inflation isn’t low enough and the effect of bond buying with historically low US yields is meaningless.
  • Greek elections are in their final stretch: The last polls for the Greek elections were mixed: some show a tie between leading pro-bailout New Democracy and anti-bailout SYRIZA. Others show one of the parties leading. We are now in the “blackout” period were polls are banned. The election of anti-bailout SYRIZA will certainly accelerate the Greek exit.  See how to trade the Grexit with EUR/USD.
  • Money leaving Greece: Greek banks received 18 billion euros in recapitalization money but this seems like a temporary relief. Companies are moving money out of the country, and the bigger problem is with tax payments: many  Greeks are deferring tax payments  and this weighs heavily on the state coffers, which are running dry.
  • Will the ECB step up?: There is a lot of tension towards the ECB rate decision held on Wednesday for a change. Some speculate that Draghi will cut the interest rate to help the struggling economies. Yet Draghi said clearly that the ball is the governments’ court and released a stark warning in an official appearance in the European parliament. Nevertheless, the ECB has more firepower than any other factor, and could lower Spanish yields quite instantly if it only wanted to.