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Euro dollar  was saved from the abyss by the super strong Swiss move to hold EUR/CHF above 1.20. But this effect is fading away as the reality of the debt crisis resumes its weight on the pair.

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

EUR/USD Technicals

  • Asian session: Downfall from yesterday’s move continued, and the pair was close to support at 1.4030. The Swiss move saved it from falling, and the pair found resistance at 1.4282 in a wild move. It then began drifting lower.
  • Current range 1.41 to 1.4160.EUR USD Chart September 6 2011
  • Further levels in both directions: Below  1.41, 1.4030, 1.3950, 1.3838, 1.3750.
  • Above:  1.4160, 1.4220, 1.4282, 1.4330, 1.44, 1.4480, 1.4520, 1.4550,
  • 1.4030 returned to its critical role as support for the long term wide range. 1.41 is only weak support.
  • 1.4160 is weak resistance on the upside – 1.4282 is much stronger.

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

EUR/USD Fundamentals

  • 9:00 European Revised GDP. Exp. +0.2%. Actual +0.2%.
  • 10:00  German Factory Orders. Exp. -1.5%. Actual -2.8% – another sign of core slowdown.
  • 14:00 US  ISM Non-Manufacturing PMI. Exp. 51.2 points. This is another critical release towards the FOMC decision. See how to trade this event with EUR/USD.

* All times are GMT.

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

EUR/USD Sentiment

  • Swiss sugar rush: The SNB decided to set a floor of 1.20 in EUR/CHF in order to help the economy. The statement was very strong and included a pledge to buy unlimited amounts of foreign currency and “not to tolerate” the strength of the Swiss franc, as long as deflation risks are strong. EUR/CHF shot up by over 1100 pips (from 1.10 to 1.2150) before settling above 1.20. This pushed EUR/USD higher, but this move is fading out.
  • Greek bailout seriously questioned: The EU / IMF delegation left Greece with anger, hinting that the Greeks should do more to meet their obligations. European leaders are urging the July 21 agreements to be ratified and everybody is warning of dangerous times. An internal committee in Greece stated that Greek debt is “out of control”. It’s the same crisis over and over again.
  • Italy in trouble: Berlusconi retreated from some of the austerity measures and was apparently “punished” by the ECB. Italian bond yields are on the rise again, around 5.5%. There are more debt issues.  Here are 7 reasons for the recent fall of the euro.
  • US jobs stall    The US job market saw no change in jobs. This can push the FOMC to further easing steps, perhaps QE3, although the chances are low. The ISM Non-Manufacturing PMI is probably the last major figure before the release. It is expected to show slow growth. A drop under 50 points will mean contraction in the biggest American sector, and will push Bernanke to action.
  • 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? We’ll know more on Thursday.