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Euro dollar  is making a nice comeback after falling into the abyss. The Italian parliament has brought forward the austerity measure vote, and this may send Berlusconi out sooner. In addition, there are are rumors that the ECB will get serious about its intervention in buying Italian bonds. Whether it’s the ECB or not, yields are finally relaxing. Economic indicators aren’t shining on a busy day.

Here’s a quick update on technicals, fundamentals and what’s going on in the markets.

EUR/USD Technicals

  • Asian session: Very quiet session in range..
  • Current range:  1.3550 to 1.3650EUR USD Chart November 10 2011
  • Further levels in both directions: Below   1.3550, 1.3480, 1.3360, 1.3250.
  • Above:   1.3650, 1.3725, 1.38, 1.3838, 1.39, 1.3950, 1.4050, 1.4130, 1.42, 1.4250, 1.4282.
  • 1.3650 made a complete switch from support to resistance after yesterday’s collapse. Further important resistance is at 1.3838.
  • 1.3480 was the trough of the current move down, on the road to 1.3145.

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

EUR/USD Fundamentals

  • 6:30  French CPI. Exp. +0.1%. Actual +0.2%.
  • 7:00  German Final CPI. Exp. 0%. Actual 0%.
  • 7:00  German WPI. Exp. +0.2%. Actual -1%.
  • 7:45  French Industrial Production. Exp. -0.6%. Actual -1.7%. Another bitter disappointment.
  • 9:00  ECB Monthly Bulletin. Forecasts downgraded.
  • 13:30 US  Unemployment Claims. Exp. 401K.
  • 13:30 US Trade Balance. Exp. -46.1 billion.
  • 13:30 US  Import Prices. Exp. +0.1%.
  • 15:40 US FOMC member Charles Evans talks.
  • 16:45 US Federal Reserve Chairman Ben Bernanke speaks.
  • 18:15 US FOMC member Janet Yellen talks.
  • 19:00 US  Federal Budget Balance. Exp. -107.5 billion.

* All times are GMT.

For more events later in the week, see the Euro to dollar forecast

EUR/USD Sentiment

  • ECB Hitting the Floor?: The rise in margins for Italian bonds sent yields above the scary 7% and sent the euro crashing down. ECB bond buying only marginally helped. There are rumors that Mario Draghi will step up his efforts and buy a lot of bonds. Yields are already significantly lower, under 7%, and the euro is higher. Eventually, this could turn into a full scale QE program that will weigh on the euro.
  • Italian vote: tomorrow:  The Italian Senate will vote on new austerity measures already tomorrow, earlier than expected. This will pave the way for Berlusconi’s departure and for a new government. Berlusconi is seen as an obstacle, although Italy has enough problems also without him.
  • A new Greek government: Greece’s Prime Minister George Papandreou already submitted his resignation, and ex-ECB member Lucas Demetrios Papademos  will likely take his seat in a temporary government before elections are due. This might happen already today.
  • Geopolitical tension: The IAEA report about Iran triggered more tension, as expected. The talks in Israel about striking Iran and the Iranian threats to retaliate have stepped up. This also helps the dollar and yen against all the rest. Nevertheless, looking deeper into the situation shows that there is little chance of a real escalation. Here are 5 reasons why Israel will not attack Iran.
  • Recession coming to Europe: A collapse in French and German industrial production raise the worried voices about a recession.  Draghi, the new president of the ECB  spoke about a mild recession. .
  • US avoiding recession?: The fresh Non-Farm Payrolls report, with its revisions and the drop in unemployment join other figures and point to no recession in the US. Today we will get to see the job market through the weekly jobless claims.