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Euro dollar  is now getting comfortable in a lower range, still enjoying the German court decision. But this isn’t likely to last long, as the market awaits the rate decision and the press conference by ECB president Trichet. Also in the US, many important indicators are released, with the head of the central bank speaking as well.

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

EUR/USD Technicals

  • Asian session: A relaxed session saw the pair trade in the 1.4030 to 1.41 range.
  • Current range 1.4030 to 1.41.EUR USD Chart September 8 2011
  • Further levels in both directions: Below  1.4030, 1.3950, 1.3838, 1.3750, 1.36.
  • Above:  1.41, 1.4160, 1.4220, 1.4282, 1.4330, 1.44, 1.4480, 1.4520, 1.4550.
  • 1.4030 is now weaker after being broken. Key support is 1.3950.
  • 1.4160 returns to be strong resistance on the upside.

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

EUR/USD Fundamentals

  • 6:00  German Trade Balance. Exp. 11 billion. Actual 10.1 billion.
  • 6:45  French Trade Balance. Exp. -5.8 billion. Actual -6.5 billion.
  • 11:45 European rate decision. Exp. unchanged at 1.50%.
  • 12:30 ECB president Jean-Claude Trichet meets the press. See ECB preview.
  • 12:30 US  Unemployment Claims. Exp. 407K.
  • 12:30 US  Trade Balance. Exp. -50 billion.
  • 17:30 Federal Reserve Chairman Ben Bernanke speaks.
  • 19:00 US  Consumer Credit. Exp. 6.5 billion.
  • 23:00 US President Obama speaks. He will lay out new plans to create jobs.

* All times are GMT.

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

EUR/USD Sentiment

  • Will Trichet hint about a rate cut?: Tension is mounting towards the ECB decision, one before last for Trichet. After already acknowledging the lower inflation, Trichet is likely to soften his tone. Will he take another big step? See the  ECB Preview  for details.
  • Bailouts approved: The Karlsruhe based constitutional court gave the green light to bailouts, but the decision was tight and more parliamentary supervision was advised. This helped the euro stabilize above 1.40.
  • Lower chance of QE3    After the bitter disappointment from the Non-Farm Payrolls, the ISM Non-Manufacturing PMIcame out better than expected  and lowered the expectations for QE3. It seems that “Operation Twist”, lowering long term yields is the preferred action by the Fed.
  • G7 Intervention?: The finance ministers of the G-7 countries will meet over the weekend. There is talk that they will coordinate significant action. No details are available.
  • Swiss sugar rush: The SNB decided to set a floor of 1.20 in EUR/CHF in order to help the economy. In the meantime, this move is successful, and it helps EUR/USD.
  • Greek bailout seriously questioned: German finance minister stated “No money for Greece” if it doesn’t get serious. Political capacity in Athens is limited. An internal committee in Greece stated that Greek debt is “out of control”. It’s the same crisis over and over again. The Slovak parliament will discuss the extension of the EFSF only in December. While the current crisis has a godd chance of being sorted out, the next one towards the end of the year is at risk.
  • 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. We might hear more about it from Trichet.
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