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EUR/USD could not challenge the one year high and lost some of its gains as the debt crisis returns to center stage with Portugal voting on the budget – a critical measure to avoid a bailout. It currently holds on to support. Will the pair lose it from here? Here’s a quick update on technicals, fundamentals and community trends.

EUR/USD Technicals

  • Asian session:  Euro/Dollar fell towards 1.4160 at the beginning of the session, and remained there.
  • Current range – 1.4160 – 1.4282

  • Further levels in both directions: Below 1.4160, 1.4030, 1.3950, 1.3860, 1.3760, 1.37, 1.3610, 1.35, 1.3440, 1.3334, 1.3267, 1.3180, 1.3080, 1.2970.
  • Above:    1.4282, 1.4450, 1.4580, 1.48, 1.50.
  • 1.4282 couldn’t be challenged. This is the highest level in a year (reached in November). We currently see a bounce.
  • 1.4030 now turned into important support after being broken – this is the key level to lower ones.

Euro/Dollar losing some steam  – click on the graph to enlarge.

EUR/USD Fundamentals –

  • 10:00 European  Industrial New Orders. Exp. +1.4%.
  • 11:00 US FOMC member Richard Fisher talks. Hawkish comments expected.
  • 14:00 US New Home Sales. Exp. 291K.
  • 16:00 US Federal Reserve Chairman Ben Bernanke talks.

* All times are GMT.

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

EUR/USD Sentiment

  • Bailout for Portugal – Today, the Portuguese parliament votes on the budget. The approval of the budget is highly important for calming investors and lowering yields as they refuse to fall from 7.50% (ten year notes). The bailout is also getting closer as Moody’s downgraded some government agencies that indeed  find it hard to finance themselves. The Euro is finally beginning to react to the situation there. . The second EU Summit at the of the week is critical for the Euro. Together with the credit downgrade by Moody’s and the weak decision in the first EU Summit, this makes the bailout closer. Here’s a  full analysis of the EU Summit.
  • European officials state rate hike is underway:  Mersch and especially Trichet as well as others, leave no point for doubt that the upcoming ECB meeting will decide to hike the interest rate. These talks  sent the Euro higher, but the Portuguese situation is beginning to get the limelight.
  • International Currency Intervention: The G7 countries intervened to push the yen lower and aid Japan’s economy in the face of the earthquake. This had a side effect of weakening the dollar against the Euro. No fresh interventions have been recorded since Friday. These moves can rock the Euro as well.
  • Libyan Airstrikes Weakening: Air strikes in Libya began over the weekend but have waned off.  See a full analysis of the UN decision on Libya and the implications for oil and the dollar. Currentl oil continues to rise as the regime in Yemen is on the brink of collapse, and Mid-East protests have spread to as far off as Syria.

Currensee Community: 58% are long , 42% are short. These are 1462 open positions in real accounts trading this pair at the moment.