EUR/USD Mar. 30 – Narrowing Channel Hints a Breakout

EUR/USD could not hold on to its gains and is falling again, in a narrowing channel, as worries from peripheral countries weigh on the common currency. A major hint towards Friday’s NFP is released today. Will Euro/Dollar break out of the channel and out of range?  Here’s a quick update on technicals, fundamentals and community trends.

EUR/USD Technicals

• Asian session:  Relatively quiet session saw a drift downwards, well within the range.
• Current range – 1.4030 – 1.4160

• Further levels in both directions: Below 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:    1.4160, 1.4282, 1.4450, 1.4580, 1.48, 1.50.
• Downtrend resistance and uptrend support that emerged in recent days are getting too close. Will this result in a break out of the wider 1.4030 – 1.4160 range?
• 1.4160 has a more important role now as resistance, although it still plays second fiddle to 1.4282, the one year high.
  
• 1.4030, the important support line, is now undergoing serious tests.

Euro/Dollar within narrowing range  – click on the graph to enlarge.

EUR/USD Fundamentals –

• 11:30 US  Challenger Job Cuts. First hint for NFP.
• 12:15 ADP Non-Farm Payrolls. Exp. 205K. Important market mover towards NFP.

* All times are GMT.

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

EUR/USD Sentiment

• Hawks dominant in Federal Reserve:  Many Fed official spoke out about stopping QE2 and one member, Charles Plosser, also spoke about raising the rates. Then we got fresh dovish comments from Evans and Rosengren about keeping loose policy. But yet again, James Bullard said that normalizing could happen before the crises end. Rate hike not ruled out in the US. There’s a growing notion that no QE3 will be seen.
  
• Irish Banks Default: Stress are due tomorrow, and are likely to show a need for significant funding for Irish banks. Otherwise, they might default. Here’s an analysis of the Irish move and the meaning for the euro.
• Default for Greece: More credit downgrade were seen, and it is becoming evident that the first country to receive a bailout is widely thought to default – fail to pay its debt. This is according to an economists’ survey by the BBC.
• Bailout for Portugal – After the Portuguese government collapsed, the recent credit downgrades by Moody’s, Fitch and S&P and the yields that are over the roof, ECB member Evald Nowotny made an open call for a bailout. This isn’t good for the Euro.
• European officials state rate hike is underway:  European central bankers make their message very clear – the rate is going to rise. These talks  sent the Euro higher, and they join the mix of European talks. Trichet hinted about many hikes earlier in the week, but this trend meets hawks on the other side of the Atlantic.

Currensee Community: 52% are long , 48% are short. These are 605 open positions in real accounts trading this pair at the moment.