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Euro dollar  continues moving forward at the high end of a distinct uptrend channel. Hopes for a prevention of a Greek default, eurobonds and a small push from the SNB all help the euro, as it approaches critical resistance. We have a big bulk of US news today – important information towards the FOMC meeting next week.

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

EUR/USD Technicals

  • Asian session: A slow session saw the pair drifting gently lower towards the middle of the channel. It pushed forward in the European session.
  • Current range: 1.37 to 1.3788.EUR USD Chart September 15 2011
  • Further levels in both directions: Below  1.37, 1.3630, 1.3570, 1.3510, 1.3440, 1.3350, 1.3250.
  • Above:  1.3788, 1.3838, 1.3950, 1.4030, 1.41.
  • The uptrend channel dominates the pair’s trading. We are close to the upper end now.
  • Critical resistance is at 1.3838 – which was the final frontier on the downside before the pair broke down.
  • The really critical line of support is 1.3440. Lines before this one are minor.

Euro/Dollar following the uptrend channel  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 8:00  ECB Monthly Bulletin. It reflected the decision to downgrade forecasts.
  • 9:00 European CPI. Exp. 2.5%. Actual 2.5%. Core exp. 1.2%. Actual 1.2%. No surprises and no changes.
  • 9:00 European  Employment Change. Exp. +0.2%. Actual +0.2%.
  • 12:30 US  Unemployment Claims. Exp. 410K.
  • 12:30 US  CPI. Exp. +0.2%. Core CPI exp. +0.2%.
  • 12:30 US  Empire State Manufacturing Index. Exp. -3.9 points.
  • 12:30 US Current Account. Exp. -122 billion.
  • 12:45 US Federal Reserve Chairman Ben Bernanke talks. This isn’t an important speech, yet Bernanke may surprise.
  • 13:15 US  Industrial Production. Exp. +0.1%.
  • 13:15 US  Capacity Utilization Rate. Exp. 77.5%.
  • 14:00 US  Philly Fed Manufacturing Index. Exp. -14.7 points. See how to trade this event with EUR/USD.
  • 17:45 US FOMC member  Daniel Tarullo talks.
  • 18:00 ECB president Jean-Claude Trichet talks. This is an important speech before the finance ministers (including Geithner from the US) will meet.

* All times are GMT.

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

EUR/USD Sentiment

  • Swiss Sugar Rush 2:  In its  quarterly rate decision, the SNB reiterated the defense of EUR/CHF at 1.20. This gave a boost to the euro once again.
  • Low chance of QE3: PPI figures weren’t exciting but they didn’t point to deflation. Today’s bulk of US data consists of CPI – without consumer deflation, the chances of further easing is low. Also the weekly jobless claims and the Philly Fed Index (which disappointed badly last month) will provide the last important pieces of data before the FOMC meeting. They will likely provide new steps, but refrain from more QE.
  • Merkel, Sarkozy and Papandreu deliver optimism  :  Leaders of Germany, France and Greece spoke in a teleconference and provided optimistic statements. This helped the euro. Greek finance minister laid out a plan to impose a property tax that would close the 2 billion euros gap that the country has. Will it pass? Greeks are quite unhappy with this,  but this could secure the next tranche of aid.
  • China will not save Italy: The Chinese prime minister made it clear that nothing new is expected – China might make bigger investments in Europe once “Europe gets its house in order”. The house isn’t in order.
  • French banks downgraded: As expected,  Societe Generale,  which is heavily leveraged, and Credit Agricole received credit rating downgrades. BNP Paribas is still under review.
  • Germany getting ready for future Greek default: German chancellor Angela Merkel is officially working to prevent a Greek default. One German minister said that a Greek default isn’t “taboo”. While more senior figures say that a default is bad and that Germany is working to avoid it, the German finance ministry is already working on plans to bail out the banks in two scenarios of a Greek default: one with Greece remaining in the euro zone, and another with Greece out of it.
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