EUR/USD Mar. 10 – Tumbling Down on Spanish Downgrade

EUR/USD is losing support and falling as Spain  received a painful downgrade from Moody’s. Where will this stop? Here’s a quick update on technicals, fundamentals and community trends.

EUR/USD Technicals

• Asian session:  Quiet session within 1.3860 – 1.3950 range. Fall began in European session.
• Current range – 1.3760 – 1.3860

• Further levels in both directions: Below 1.3760, 1.37, 1.3610, 1.35, 1.3440, 1.3334, 1.3267, 1.3180, 1.3080, 1.2970.
• Above:  1.38601.3950, 1.4030, 1.4160, 1.4282, 1.44
• While the round number of 1.40 is eyed by many, real resistance is only at 1.4030.
• Key support at 1.3860 held well in the past few days but collapsed on the Spanish news.

Euro/Dollar in narrow range under resistance – click on the graph to enlarge.

EUR/USD Fundamentals –

• 7:00 German Trade Balance. Exp. +13.7 billion. Actual +11.8.
• 7:45 French Industrial Production. Exp. +0.6%. Actual +1%.
• 9:00 European ECB Monthly Bulletin.
• 13:30 US Unemployment Claims. Exp. 375K.
• 13:30 US Trade Balance. Exp. -41 billion.
• 14:00 ECB member Axel Weber talks.
• 18:00 US Federal Budget Balance. Exp. -235 billion.

* All times are GMT.

For more events later in the week, see the  EUR/USD forecast

EUR/USD Sentiment

• Moody’s downgrades Spain’s credit rating by one level to AA2, stating that the eventual cost of bank restructuring will pass the government’s target of 20 billion euros. They estimate it will be at least double. Moody’s also left the outlook negative. This is a blow to the Euro.
• Bailout for Portugal – Yields broke higher – to 7.65%.  There are growing talks that Portugal will need to take a bailout, as yields are above 7% for too much time. Portugal denies, but the  deadline is getting closer.
• The prices of oil retreated from their highs, although the Middle East is still troubled. The  ongoing battles in the oil dispatching city of Ras Lanuf in Libya draw the world’s attention, as well as Saudi protests.
• Greece received a significant downgrade from Moody’s – three notches. This had a strong effect on Greek bonds, but not on the Euro. Spain is already bigger.
• US employment figures were good –  unemployment dropped below 9% and it seems that the economy is gradually moving forward.

Currensee Community: 61% are long , 39% are short. These are 1449 open positions in real accounts trading this pair at the moment.