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Euro dollar  continues losing ground as a lot of cold water is spilled on the high hopes and grand promises for a comprehensive solution. The pair managed to stabilize at the next support line A big bulk of events awaits us today. Will the fall continue?

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

EUR/USD Technicals

  • Asian session: The pair managed to recover during this session but couldn’t tackle the 1.38 line. It resumed its falls during the European session.
  • Current range: 1.37 to 1.38.EUR USD Chart October 18 2011
  • Further levels in both directions: Below 1.37, 1.3630, 1.3550, 1.35, 1.34, 1.3360, 1.3285.
  • Above:   1.38, 1.3838, 1.39, 1.3950, 1.4030, 1.4160, 1.4282.
  • 1.37 was a tough cap on the way up, and now provides firm support.
  • 1.38 is only a minor line before 1.3838.

Euro/Dollar trades quietly on high ground  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 9:00  German ZEW Economic Sentiment. Exp. -44.8 points.
  • 9:00 Euro-zone  ZEW Economic Sentiment. Exp. 45.1 points.
  • 12:30 US  PPI. Exp. +0.2%. Core PPI exp. +0.1%.
  • 13:00 US  TIC Long-Term Purchases. Exp. 27.8 billion. See how to trade this event with USD/JPY.
  • 14:00 US  NAHB Housing Market Index. Exp. 15 points.
  • 17:15 US Federal Reserve Chairman Ben Bernanke talks.

* All times are GMT.

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

EUR/USD Sentiment

  • French Downgrade?: Moody’s has hinted that the stable outlook of France’s perfect AAA rating is questioned now. This was bound to happen as the French economy stalled in Q2 and the EFSF burden is rising.
  • Chinese slowdown?: China was one of the first major countries to release GDP numbers. The economy grew by 9.1% on an annual basis. This is lower than 9.3% that was expected and points to a significant slowdown. This also weighs on the euro.
  • A 50% Greek haircut coming: The German finance minister joined the chorus calling for a larger haircut for Greece. The CEO of Deutsche Bank is reportedly negotiating a 50% haircut.
  • New deadline: The G-20 finance ministers discussed the debt crisis and talked about presenting a comprehensive plan by October 23, when European leaders meet, and celebrating it on the first week of November, when G-20 heads of state meet  .  This fits perfectly well with  The Plan  of a Greek default at the beginning of November.
  • Greece: no aid yet, but strikes underway: While Greece awaits aid, it still needs to pass more austerity measures in parliament on Thursday. A general strike awaits them on Wednesday and Thursday and a strike in Athens is already underway. The army is cleaning the streets.
  • Will the US avoid recession?: The excellent retail sales report from the US convinced many that the US will avoid recession, at least in Q3. Today’s PPI will provide some insight about inflation and the chances of QE3 in the US, which are currently very low.
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