Euro/dollar continues to slide, as the political crisis in Greece is worsening. Talks aimed at forming a coalition government remained deadlocked, and another election seem likely. The euro wasn’t helped by a strong German GDP release, as recent Euro-zone data has not impressed the markets. Today’s key indicators are US Building Permits and release of the minutes from the most recent FOMC meeting. Here’s an update on technicals, fundamentals and what’s going on in the markets. EUR/USD Technicals Asian session: EUR/USD dropped to a low of 1.2684, and consolidated at 1.2686. The pair has edged upwards in the European session, trading at 1.2701. Current range: 1.2660 to 1.2760. Further levels in both directions: Below: 1.2660, 1.2623 and 1.2587. Above: 1.2760, 1.2873, 1.29, 1.2960, 1.30, 1.3050, 1.3110, 1.3165, 1.3212, 1.33 and 1.34. For a second week in a row, a weekend gap is seen. This gap wasn’t closed quickly (again) and this is a bearish sign. 1.2760 is the next resistance line, as the pair has moved downwards. 1.2660 is providing support, and could be tested if the euro continues to weaken. Euro/Dollar sliding on likely elections in Greece – click on the graph to enlarge. EUR/USD Fundamentals 8:00 Italian Trade Balance. Exp. -1.35B. Actual +2.06B. 9:00 Euro-zone CPI. Exp. 2.6%. Actual 2.6%. 9:00 Euro-zone Core CPI. Exp. 1.5%. Actual 1.5%. 9:00 Euro-zone Trade Balance. Exp. 4.3B. Actual 4.3B. Tentative: German 10-y Bond Auction. 12:30 US Building Permits. Exp. 0.73M. 12:30 US Housing Starts. Exp. 0.69M. 13:15 US Capacity Utilization Rates. Exp. 78.9%. 13:15 US Industrial Production. Exp. 0.6%. 14:00 ECB President Draghi Speaks. 14:00 US Mortgage Delinquencies. 14:30 US Crude Oil Inventories. Exp. 1.5M. 18:00 FOMC Meeting Minutes. For more events later in the week, see the Euro to dollar forecast EUR/USD Sentiment Elections in Greece – Here We Go Again?: Greek politicians have been working hard to hammer out some type of coalition government, so far with no success. A unity government to renegotiate the bailout seemed close as moderate Democratic Left was willing to join mainstream parties, but it conditioned it on the participation of SYRIZA – the radical left-wing party that wants to cancel the aid package. SYRIZA, which came out second in the elections, is enjoying higher popularity and could perform even better in the next election. For now, a second round of elections seems likely on June 10th or June 17th. Markets jittery on talk of Greece leaving Euro-zone: With the situation in Greece looking to spin out of control, nervous depositors have been withdrawing their deposits from Greek banks. German finance minister Wolfgang SchÃ¤uble, who plainly told Greece it has to chose between staying or leaving, mentioned preparations for a Grexit by his ministry. ECB member Patrick Honohan of Ireland said the impact “could be technically managed” but would hurt confidence in the zone. A senior European analyst has warned that the country may simply run out of money and descend into chaos. The markets are very nervous, and the euro could continue to nosedive. Spain’s Struggles Continue: Almost lost in all the dramatic developments in Greece is the ominous situation in Spain. Only days after Spain nationalized Bankia and introduced new measures for the banking system, it was revealed that a plan for a worsening situation is underway. Spanish 10 year bond yields are leaping to 6.26%, with the spread from German benchmark bunds reaching 4.77% – these are extreme levels. With Spain already in recession and suffering from 24% unemployment, the economic situation appears to be going from bad to worse. Merkel and Hollande Kick Off: FranÃ§ois Hollande kicked off his presidency on Tuesday morning by flying to Berlin to meet with Angela Merkel. It was an inauspicious start, as Hollande’s plane was struck by lightning, delaying the leaders’ meeting. With the situation in Europe worsening by the day, the leaders of the two biggest economies in the Eurozone cannot afford to bang heads, and some kind of joint action will have to be taken by France and Germany. With Merkel favoring austerity and Hollande promoting growth, it clearly is not a match made in heaven. It seems likely that eventually, Germany will have to bend. Deeper Recession in Europe: Consumer Sentiment out of the Euro-zone and Germany were big disappointments, as both fell well below the market forecast. Strong German GDP figures were offset by poor Italian GDP and French CPI readings. Further weak economic data out of the Euro-zone is likely to send the euro tumbling some more. US Economy Improving (slowly) : The data from the US is mixed, but still pointing to growth, contrary to the old continent. Employment figures have improved somewhat, but Core Retail Sales were weak. There are several key indicators still to come out of the US, and these could impact on EUR/USD. Fed Unlikely to Intervene: Balance sheet measures are still on the cards (QE3) according to the Bernanke, but a significant deflation or no growth can revive the chances of more dollar printing. QE3 is currently on the back burner. A “hands off” policy of low interest rates for the foreseeable future may not make for dramatic moves in market, but it is supportive for the greenback, which has benefited from the turmoil gripping Europe. Kenny Fisher Kenny Fisher Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer. Kenny's Google Profile View All Post By Kenny Fisher EUR/USD DailyForex News Today: Daily Trading News share Read Next FXCM Announces an App Store for Forex Traders Yohay Elam 10 years Euro/dollar continues to slide, as the political crisis in Greece is worsening. Talks aimed at forming a coalition government remained deadlocked, and another election seem likely. The euro wasn't helped by a strong German GDP release, as recent Euro-zone data has not impressed the markets. Today's key indicators are US Building Permits and release of the minutes from the most recent FOMC meeting. Here's an update on technicals, fundamentals and what's going on in the markets. EUR/USD Technicals Asian session: EUR/USD dropped to a low of 1.2684, and consolidated at 1.2686. 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