EUR/USD Sep. 7 – Stabilizing after a collapse

EUR/USD collapsed on low volume, and will pick a new direction now that the holiday is over. Here is a quick update on technicals, fundamentals and community trends.

EUR/USD within uptrend channels. Click to enlarge.

EUR/USD Technicals

• Asian session:  Eventful session, with Euro/Dollar dropping sharply from 1.2880 to 1.2780, breaking both uptrend support lines. The reason – European banks hid the real valuation of sovereign debt in the stress tests. Their problems are apparently much bigger.
• Current Range is between 1.2770 to 1.2840.
• Further levels: Below,  1.2722, 1.2610, 1.2460 and 1.2330.  Above   1.2930, 1.30, 1.3110 and 1.3267.
• Uptrend channel broken: EUR/USD trades in an uptrend channel. Uptrend support began from the lows it reached on August 24th through a low on August 25th. Uptrend resistance began on a swing high on August 24th and was formed on August 26th. After losing it, EUR/USD returned to this range, and even tested the top limit with a swing move to 1.2855 – exactly at uptrend resistance. Currently the pair is just below the uptrend supprt.
• Secondary channel broken: The uptrend resistance is the same as in the main channel, but the uptrend support is closer – began only in September. It was broken during the Asian session.

EUR/USD Fundamentals

All times are GMT. Most important events emphasized.

• 10:00: German Factory Orders. Exp. +0.6% points.

EUR/USD Sentiment

• Market is drifting between “risk on” and “risk off” with a tendency to “risk off”. With “risk off”, good US figures boost the dollar and bad ones hurt it. When risk is on, bad US figures boost the dollar. In recent days, we’ve seen more normal behavior.
• The 1.2610 line is critical on the downside, 1.3110 on the upside.
• US and Canada return from the Labor Day weekend. Action already seen in the Asian session. No big events today, but there will be readjustments after the big drop.
• Currensee Community: 56% are Short, 44% are long. These are 1006 open positions in real accounts trading this pair at the moment.

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