The pressure on the single currency continued today to get it down below 1.2858 whereas it could rebound last week versus the greenback which is supported by the current risk aversion sentiment which contained the markets worrying about the EU debt crisis outlook.
From another side, The greenback could found strength after the release of better than expected data showing declining of the US initial weekly jobless claim to 371k from 387k a week earlier and also rising of the added jobs to the US private sector to 325k in December while the markets were waiting for adding just 165k jobs adding 204k in November as these data could not add to the markets risk appetite which is still negatively impacted by the EU debt crisis as it has done for the USD as they reduce the pressure on the Fed to support the labor market by adding more liquidity by a QE3 soon.
So, the US equities markets are still down while EURUSD is trading right now below 1.28 and God willing, in the case of declining, the pair can meet supporting levels at 1.2586 which has been the formed bottom on 24th of August 2010 and this can be followed by 1.2151 which is the last low before 1.1876 whereas the pair has rebound forming its bottom on 7th of June 2010 to 1.4939 whereas the pair has managed to ease back again on 4th of May 2011 after a bubble in the commodities market while the way up can meet resistance at 1.30 psychological level then 1.3075 whereas the pair failed to continue rising this week with an Irish announcement of failing to meet the budget deficit target following Spain which has announced the same while the worries about the demand for the EU long term bonds are undermining the market sentiment with the yield of the Italian 10 years is still around 7% despite the ECB's recent easing measures for lowering the cost of borrowing which could succeed top spur demand for the EU debt ailing countries short term bonds driving their yields down significantly for getting use of these short term injected cheap money by the ECB but it looks that the demand for these countries long term bonds are still in need of greater deal of certainty and stability of the financial situations of these countries while the credit rating downgrading risks are still looming around the EU countries.
FX Market Strategist
Walid Salah El Din