• Home ::
• Fundamental ::
• Market View ::
• FX daily Commentary

• Send
• Print
• Add To
• Rss

FX daily Commentary

This report has been deactivated

Euro Continues to Deteriorate Against the Dollar!

Mon, Oct 6 2008, 09:53 GMT
by Lena Manousarides

FXGreece

The week starts with euro weakness all across the board and especially against the dollar, after the pair opened on Sunday night at 1.3630 from 1.3780 Friday close. The Euro extended its losses during Asia and continues till now to trade on the downside breaking important support level of 1.3580 and printing new multi year low at 1.3540.

The fact that US government accepted the $700Billion rescue plan, after weeks of discussions, combined with the recent negative sentiment regarding the European Economy, are the main reasons why the European currency seems to suffer. Let’s not forget that Trichets speech after the meeting last week basically gave the green light for rate cuts due to the slowing of the economy and easing inflationary pressures.

This week we have a few economic events to keep us occupied, with most important ones being the FOMC minutes and Bernanke speech. Also we have BOE rate decision on Thursday and traders have already priced in a rate cut of 25 points. It will be interesting to watch the FOMC minutes after the last meeting and traders will monitor closely any comments that Bernanke and co says regarding the inflation. Analysts predict that due to the recent financial crisis and the liquidity problems, FED might be forced to cu t rates together with other Central Banks. All will be revealed soon and if we see signs that Fed is actually thinking of easing rates further, dollar will be hit with some weakness.

Today economic calendar is empty, and therefore the markets will have a chance to digest all the events that were unfolded this weekend. We had the Paris emergency summit , where 4 of the major European economies met in order to discuss financial crisis in Euro zone and what measures they need to take in order to survive the turmoil. News that another German Bank, Hypo Real Estate failed, gave European economy another blow and German Finance Minister Angela Merkel told reporters she will do anything in her power to save the situation.

EUR/USD continues to deteriorate and next support level lies at 1.3480. The pair has suffered many losses and charts suggest that there is more to come. If 1.35 gives way, we don’t have any important support levels till 1.33.

Let’s see what today brings and how New York open will react to recent euro drop. As market participants are in search of EUR/USD bottom the question now is where the drop will start to fade?

Published on  Mon, Oct 6 2008, 09:55 GMT