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Euro dollar  is settling in an area last seen two months ago, after Trichet’s blow. Things are getting worse for Greece and as long as news from the US are stable, the pair has a chance of taking a deeper fall to a 6 month low. How will it end the week?

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

EUR/USD Technicals

  • Asian session: A quiet session sees the pair consolidate the falls and settle under 1.3950.
  • Current range 1.3872 to 1.3950.EUR USD Chart September 9 2011
  • Further levels in both directions: Below  1.3872, 1.3838, 1.3750, 1.3630, 1.3570.
  • Above:  1.3950, 1.4030, 1.41, 1.4160, 1.4220, 1.4282, 1.4330.
  • 1.3872 is only a weak support line where the pair stopped after the collapse. 1.3838 is a more serious line.
  • 1.3950 switches positions quickly.

Euro/Dollar above critical support  – click on the graph to enlarge.

EUR/USD Fundamentals

  • 6:00  German Final CPI. Exp. -0.1%. Actual 0%.
  • 6:45  French Industrial Production. Exp. +0.4%. Actual +1.5%.
  • 14:00 US  Wholesale Inventories. Exp. +0.8%.

* All times are GMT.

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

EUR/USD Sentiment

  • Trichet significantly lowers forecast: The president of the ECB said that there are downside risks to growth and no inflation risks. This is a significant change. He refused to discuss rate cuts, in a long and somewhat amusing press conference. See Trichet’s highlights. All in all, he took the euro one leg lower during the speech. The pair continued south afterward.
  • 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.
  • Obama announces job plan: The president of the US laid out his jobs plan, worth $447 billion. The funding for the program will be presented next week, and it is uncertain if it will pass. Impact on currencies was minor.
  • Lower chance of QE3    US ISM Non-Manufacturing PMIcame out better than expected  and lowered the expectations for QE3. Bernanke said he has a set of tools, but didn’t provide specifics. It seems that “Operation Twist”, lowering long term yields is the preferred action by the Fed.
  • 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.
  • 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 enjoys a really great success. A high value of EUR/CHF above the 1.20 floor allows for more falls in EUR/USD.