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EUR/USD is stabilizing in range as there are mixed headlines about a new bailout for Greece. The economic calendar is warming up today. Will we see a breakout soon, or does this trading provide opportunities for range trading?EUR USD Chart May 10. Here’s a quick update on technicals, fundamentals and what’s going on in the markets.

EUR/USD Technicals

  • Asian session: The session was rather active, with a fall to the 1.4282 line before rising back up .
  • Current range 1.4282 – 1.4375.
  • Further levels in both directions: Below 1.4282, 1.4250, 1.4160, 1.4030, 1.3950.
  • Above:   1.4375, 1.4450, 1.4580, 1.4650, 1.47, 1.4775, 1.4882, 1.5020, 1.5144, 1.5250, 1.55
  • 1.4375 is becoming more important and it marks the top of the range.
  • Note that 1.4282 is backed by 1.4250 – it happened also in the other direction, when 1.4250 was the front line before the November high of 1.4282 was reached.

Euro/Dollar stabilizing in range  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 6:45  French Industrial Production. Exp. +0.5%. Actual -0.9%.
  • 12:30 US  Import Prices. Exp. +1.8%.
  • 13:30 US FOMC member Elizabeth Duke talks.
  • 14:00 US  Wholesale Inventories. Exp. +1%.
  • 14:00 US  IBD/TIPP Economic Optimism. Exp. 41.5 points.

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

EUR/USD Sentiment

  • Greek headlines flood the wires: There are conflicting reports about a second bailout for Greece, ranging between 60 to 100 billion euros. Extending maturities is also on the table. It is unclear what is going on, and what happened on Friday.An emergency meeting by finance ministers on Friday night probably discussed a second bailout program for Greece and not an exit of the debt laden country out of the EU. This temporarily calms the markets, although this sure opened the door for restructuring. Merkel understands that there are no better options. Note that on May 17th, there’s a meeting of economy and finance ministers from all over the Euro-zone. Some kind of decision needs to be made by then. Greece may not be eligible to receive the next tranche of aid for the current program though…
  • Irish contagion: There are growing signs that Ireland wishes to bail out of the bailout program. An influential professor explained how it should be done, and some government officials are already saying the Ireland cannot pay its debt. This is gaining traction quickly with the prime minister already being convinced that Ireland will at least get a reduced rate. Also here, the wires are hot.
  • Non-Farm Payrolls: The leading forex market mover was surprisingly good, with a gain of 244K jobs. This provides some good news for the dollar, given bad signs for the economy seen beforehand.
  • Trichet boosts the dollar: The president of the ECB not only hinted that the rate hike will be pushed back to July, but also expressed deep concern about the weakness of the dollar, taking his time in quoting US policymakers about the importance of a strong dollar. EUR/USD lost over 300 pips, commodities lost a lot of ground and the dollar rallied across the board. See the  ECB analysis for more.

FXCM Speculative Sentiment Index shows a return of the gains for the euro: 55% are short after the picture was balanced beforehand. According to this contrarian index, this shows more recovery for EUR/USD.

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