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Euro dollar  is trading very steadily on high ground after Trichet didn’t provide any big surprises. The bank recapitalization talk continues to help the euro, just before the US gets some attention with the all important Non-Farm Payrolls. How will the pair close the week?

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

EUR/USD Technicals

  • Asian session:A very quiet session saw the pair consolidating above 1.34..
  • Current range: 1.34 – 1.3450.EUR USD Chart October 7 2011
  • Further levels in both directions: Below  1.34, 1.3360, 1.3285, 1.3225, 1.3145, 1.3080,
  • Above:   1.3450,  1.35, 1.3550, 1.3630, 1.37, 1.3750, 1.3838.
  • 1.3450 turned into a significant cap on the movement higher.
  • 1.3360 is support after being broken to the upside.

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

EUR/USD Fundamentals

  • 6:45  French Trade Balance. Exp. -6.3 billion. Actual -5 billion.
  • 10:00  German Industrial Production. Exp. -1.5%.
  • 12:30 US Non-Farm Payrolls. Exp. +50K. See NFP Preview.
  • 12:30 US Unemployment Rate. Exp. 9.1%.
  • 12:30 US  Average Hourly Earnings. Exp. +0.2%.
  • 13:30 US FOMC member Richard Fisher talks.
  • 14:00 US  Wholesale Inventories. Exp. +0.6%.
  • 19:00 US Consumer Credit. Exp. 8 billion.

* All times are GMT.

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

EUR/USD Sentiment

  • Non-Farm Payrolls in Focus: There were mixed signs towards this release. While weekly jobless claims, 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.  Volatility will be high.
  • No Surprises from Trichet: The last rate decision and press conference from Jean-Claude Trichet were very much within expectations. Some members of the ECB probably wanted to cut the rates, but the hawkish stance won over. The ECB pledged to provide liquidity to banks, at a time when they need it. All in all, it was a euro-positive event, especially after the BOE decided on a massive expansion to its QE program.
  • 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 losing the spotlight: 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