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Euro dollar  is currently clinging to low support after the downfall. The suspension of the EU / IMF mission to Greece as well as the lower chances of QE3 in the US weigh on the pair, before the monthly circus of Non-Farm Payrolls.

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

EUR/USD Technicals

  • Asian session: A relatively active session – the pair tried to break 1.4282 but failed and remained above 1.4220.
  • Current range 1.4220 to 1.4282.EUR USD Chart September 2 2011
  • Further levels in both directions: Below  1.4220, 1.4160, 1.4070, 1.4030, 1.3950, 1.3838.
  • Above:  1.4282, 1.4330, 1.44, 1.4480, 1.4520, 1.4550,
  • 1.4282 returns to resistance, where it works better.
  • Serious support is at 1.4160 for now.

Euro/Dollar at low support  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 9:00 Euro-zone  PPI. Exp. +0.6%. Actual +0.5%.
  • 12:30 US Non-Farm Payrolls. Exp. 74K.  Best show in town. See NFP Preview for all the details.
  • 12:30 US  Unemployment Rate. Exp. 9.1%.
  • 12:30 US  Average Hourly Earnings. Exp. +0.2%.

* All times are GMT.

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

EUR/USD Sentiment

  • Non-Farm Payrolls awaited: Today is the day. This is of high importance today as it  can set the tone for QE3. The ADP report was OK. Today we get the weekly jobless claims (which impact the unemployment rate most) and the important manufacturing PMI. The manufacturing PMI was OK: the overall number still showed growth, and so did the employment component. It’s important to note that the Non-Manufacturing PMI is published only next week.
  • Greek bailout seriously questioned: It’s not only Finland that complicates matters. The EU / IMF delegation to Greece, which inspected the progress made according to the plan, suspended its visit. According to sources, Greece missed its target. An internal committee in Greece stated that Greek debt is “out of control”. It’s the same crisis over and over again.
  • European banks are fragile: One Greek bank had to ask for the ELA emergency fund as it lost access to liquidity. This adds to the urgent call by IMF managing director Christine Lagarde for mandatory recapitalization is needed. There are reports that EU officials are already working on “radical plans”. See more about the  Dark Clouds Over Europe’s Banks.
  • ECB  Sterilizes Bond Buying  :  The  ECB continues keeping yields down. The ECB already spent above 40 billion euros in the current round of buying Italian and Spanish bonds in the past three weeks. It has managed to drain this money from the markets. Sterilized actions are positive for the currency. If this money isn’t drained – it’s QE.
  • Trichet acknowledges weakness: The president of the  ECB  said that inflation risks are “under study”. German CPI showed a surprising drop in prices. This goes hand in hand with weak growth and weak business sentiment in Germany and across the continent. On the other hand, the Flash estimate still shows that the pace is at 2.5%.  Will Trichet cut the rates  before his term ends?
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