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Euro dollar  kicked off the new week, month and quarter with fresh lows, the lowest since January. Greece approved a new budget that falls short of targets. Worries about China also push the dollar higher.  We have an unusually busy calendar for a Monday, and it will only get busier later in the week.

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

EUR/USD Technicals

  • Asian session: The pair gapped lower. Despite closing the gap, a real recovery wasn’t seen, and a new lower range was formed.
  • Current range: 1.3313 to 1.3360EUR USD Chart October 3 2011
  • Further levels in both directions: Below  1.3313, 1.3250, 1.3180, 1.3080, 1.30, 1.2873
  • Above:  1.3360, 1.3430, 1.35, 1.3550, 1.3630, 1.37, 1.3750 1.3838
  • 1.3313 is the fresh low, but more significant support lies at 1.3250
  • 1.3430 turns into important support on any recovery attempt.

Euro/Dollar in fresh lows  – click on the graph to enlarge.

EUR/USD Fundamentals

  • All day: Euro zone finance ministers meet.
  • 7:00 Spanish Manufacturing PMI. Actual 43.7 – worst in more than a year.
  • 8:00 Euro zone Final Manufacturing PMI. Exp.48.4. Actual 48.5 points.
  • 14:00 US  ISM Manufacturing PMI. Exp. 50.5 points. A first sign before the Non-Farm Payrolls.
  • 13:30 ECB releases data about current bond buying program.
  • 14:00 US  Construction Spending . Exp. -0.1%.

* All times are GMT.

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

EUR/USD Sentiment

  • Greek budget falls short: The Greek cabinet had another emergency meeting on Sunday and it approved adjustments to the 2011 budget as well as a proposed budget for 2012. Despite severe austerity measures proposed in the budget, this still falls short of the demands of the ECB / EU / IMF troika. Greece will probably get the next tranche of aid in the next week or two, despite the shortfalls. Nevertheless, there is a growing notion that this will be the last tranche. Voices calling to prepare for a default are definitely growing.
  • No Multi-trillion bailout fund?:  The hopes of leveraging the bailout fund (EFSF) are winding down as the denials become louder and louder. While German lawmakers provided a wide approval for the new EFSF powers, the message is that this is the last approval.
  • China is landing – soft or hard?: While official manufacturing PMI is OK, there are growing worries about a real estate bubble burst. This is amplified by more and articles. The US dollar strengthens on safe haven flows.
  • Some positive US news: While the focus remains  on the European debt crisis, the significant drop in US jobless claims and the upwards revision of Q2 GDP provided some hope that the US will escape recession. These nice numbers come on the background of many weak ones. Today we will get a first hint towards the Non-Farm Payrolls on Friday.
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