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Euro dollar  is now trading in the higher end of the range. The US “Supercommittee” failed to reach a deal on a long term deficit reduction plan. While S&P and Moody’s have indicated that this wouldn’t change the rating, Fitch might still downgrade the US. The focus will likely return quickly to Europe, where bond yields are still elevated and Greece still hasn’t received the long awaited tranche of aid.

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

EUR/USD Technicals

  • Asian session: A quiet session saw EUR/USD trade in the upper part of the 1.3420-1.3550 range..
  • Current range:  1.3480 – 1.3550.EUR/USD Chart November 22 2011
  • Further levels in both directions: Below    1.3420, 1.3360, 1.3250, 1.3145 and 1.30.
  • Above:   1.3480, 1.3550, 1.3650, 1.3725, 1.38, 1.3838.
  • Stronger resistance is now found at 1.3550 as the pair is lower.
  • 1.3480 is a pivotal line within the range – important support is at 1.3420.

Euro/Dollar ticks higher- click on the graph to enlarge.

EUR/USD Fundamentals

  • 13:30 US GDP First Revision. Exp. 2.4%. See how to trade this event with EUR/USD.
  • 15:00 Euro-zone Consumer Confidence. Exp. -20 points.
  • 15:00 US  Richmond Manufacturing Index. Exp. -2 points.
  • 18:00 US FOMC member Narayana Kocherlakota talks. Moderately hawkish tone expected.
  • 19:00 US FOMC Meeting Minutes.  

* All times are GMT.

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

EUR/USD Sentiment

  • No debt reduction deal in the US: The US Supercommittee failed to reach an agreement regarding a long term debt reduction deal. According to the agreement made in August, the result is automatic cuts across the board. The discussions and the announcement of the failure came with relative calm. As mentioned in the quarterly outlook, everything depends on the level of noise and not the actual result. S&P affirmed its current, lower rating, and Moody’s confirmed the perfect AAA rating. Only Fitch is awaited and they might  downgrade  in the upcoming days, although this isn’t certain.
  • Greece still awaits aid: The new technocrat Prime Minister Papademos, flew to Brussels in order to secure the long awaited 8 billion euros. The country will run out of money in mid December, according to the latest calculations, but these are doubted. In the meantime,
  • No time for Spain:  The center-right PP party won a landslide victory in Spain’s general elections and will probably be sworn in the next month. There are reports that Spain’s designated prime minister, Mariano Rajoy, has  negotiated  â‚¬100 billion of aid with Angela Merkel. 10 year yields remain high after last week’s bad bond auction and provide no time for the new government. Yields are above 6.50%.
  • Moody’s discusses France: The rating agency discussed the rising borrowing costs of France, and hinted that this could cause a credit downgrade. If France loses its AAA rating, also the EFSF bailout fund will follow.
  • Wolves closing in on Germany: Only German bonds are really “safe” in Europe as the bond rout is spreading. But also Germany cannot stay immune. When the benchmark breaks, this will trigger a much bigger euro-crash. In addition, Jean-Claude Juncker, head of the euro-group, said that German debt levels are worrying, and that they are “larger than Spain”. When will the ECB act?
  • Euro/dollar swap like in 2008:  The cost of swapping euros to dollar’s continues rising, and shows that banks continue paying a dear price for dollars. This is a reminder of 2008 and very worrying for the whole system.
  • Are positive figures convincing the Fed?: Existing home sales were the latest positive figure coming out of the US, joining a long bunch. Today we’ll get another update on Q3 GDP. On the other hand, the Federal Reserve is worried about the the situation in Europe and a possible spillover to the US. The meeting minutes might show that once again, some members considered more easing in the meeting held at the beginning of November.