The single currency is still trying to keep its recent gained ground versus the greenback following Draghi's comments about the euro area current undervalued stance in the markets promising of taking what's needed of measures to shore up the confidence in getting over the crisis.

These comments could help the current market sentiment loading risks driving down the yield of 10 year Spanish governmental bonds below 7% after reaching 7.73% earlier this week after losing trust period because of the worries about several Spanish districts needs of bailing out.

But the pressure can get back on the single currency as the expectation of having more easing steps by the ECB are still strong as the data which are coming out from the EU are still showing persisting weakness as we have seen earlier this week that EU manufacturing PMI Flash reading of July came at a lower level again reaching 44.1 from 45.1 while the market was waiting for rising to 45.3 driving the composite index to stand at 46.4 as the same as June despite the rising of EU PMI Flash reading of the service sector in July to 47.6 from 47.1 while the consensus was referring to rising to 47.2 only and also the germane IFO business index of July which got down to 103.3 from 105.2 in June while the market was waiting for a smaller easing to 104.2 showing that the real economy is still in need of stronger efforts from the ECB which has already cut all EUR key interest rates by 0.25% on the 5th of this month and this current growing expectation of having more easing steps can keep forming pressure on the single currency while the governmental financial role of the debt ailing economies can be capped by the austerities measures which driving down its spending driving up the taxes for underpinning the governments revenues and their critical financial situations.

In this same time, the market is watching in the European efforts since the recent EU summit in June until now serious European efforts for turning to the ECB to have more duty and the power for bailing out the banking sector through single supervising and access to its funds by the ESM which may have a banking license as what has been mentioned by The Austrian ECB member lately for restructuring this sector without loading more burdens on these ailing governments.

From another side, the rising of US durable goods in June yearly by 1.6% like May while the market was waiting for just 0.4% and the decreasing of US initial jobless claim of the week ending on 21st of July to 353k from 388k while the market was waiting for 380k could help pushing up the risk appetite weighing down on the greenback across the broad and God willing, the market will be waiting today from US for the release of US Q2 GDP preliminary reading which expected to show annualized growing by 1.4% after 1.9% in the first quarter and there is also the release of US Michigan consumers sentiment index of July which is expected to be 72 as it came in the first reading from 73.2 in June.

God willing, The single currency can meet now in the case of rising further resistance at 1.2336 before 1.2402 which can be followed by 1.2443 before 1.2693 and 1.2748 which has been reached after the recent parliament elections in Greece again earlier last month while easing back again can bet met with supporting level at 1.2042 which could stave off the pair falling this week and breaking can open the way for testing 1.20 psychological level which can be followed by reaching 1.1876 again whereas the pair has rebounded forming its bottom on 7th of June 2010

Kind Regards

FX Market Strategist

Walid Salah El Din