EUR/USD Oct. 6 – Recapitalized Before Trichet

EUR/USD Oct. 6 – Recapitalized Before Trichet

Euro dollar  is moving higher within a channel as talk about massive recapitalization of banks cheers the euro, despite another sign of weakness from Germany. This is not the classical “calm before the storm” trading that precedes the ECB rate decisions. The outcome of the rate decision is quite unclear this time. The only certainty is that Trichet will put up a great show and trigger lots of action in his last press conference.

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 the pair hardly move. A push upwards towards 1.34 was seen in the European session..
  • Current range: 1.3285 to 1.3360EUR USD Chart October 6 2011
  • Further levels in both directions: Below  1.3285, 1.3225, 1.3145, 1.3080, 1.30, 1.2873, 1.25.
  • Above:   1.3360, 1.3430, 1.35, 1.3550, 1.3630, 1.37,
  • 1.3145 is the fresh low, but only a stepping stone. Very strong support is only at 1.2873, the YTD low.
  • 1.3360, which was the gap line, proved to be an important cap.

Euro/Dollar in rising channel  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 10:00 German Factory Orders. Exp. +0.2%. Actual -1.4%.
  • 11:45 ECB Rate decision. Exp.1.25% or 1.50%.
  • 12:30 Jean-Claude Trichet’s last press conference. See a preview of this all important event. Trichet’s final cut?
  • 12:30 US  Unemployment Claims. Exp. 411K.

* All times are GMT.

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

EUR/USD Sentiment

  • Goodbye Jean-Claude:  Trichet will have his last rate decision and press conference in Berlin this time. Market expectations that stood on a cut of 0.50% are now leaning towards no change. This is the first time in many months that uncertainty is high towards the decision. Any initial move on the rate decision will be limited (unless it’s a 50 bp cut) and the markets will await Trichet’s show. More liquidity will probably be announced at the press conference, that will spread across a variety of issues and will probably last long and provide high volatility. Stay tuned for a live blog. And here’s the preview again.
  • Bank aid getting closer: Was Dexia the trigger for action? After brilliant stress tests in July and after snubbing off Lagarde’s warnings, the EU is stepping up plans to shore the banks. The optimism helps the euro and the whole world..
  • Greek has money!: After the decision about the next tranche of aid was delayed until November, Greek “discovered” that it has money until then. But in the meantime, a general strike was declared in Greece. This includes airports, which are paralyzed. The theory of a Greek default at the beginning of November  sounds more real, and by then, banks will be ready
  • Mixed Non-Farm Payrolls signs: While Manufacturing PMI and ADP provide optimism, the downfall in the employment component of the services sector is worrying and could be reflected in a loss of jobs.  This event will get attention tomorrow, after the dust from Trichet will settle.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.