The Single currency is still under pressure versus the greenback after the ECB's interest rate decision of cutting the interest rate by 0.25% to be at its previous all times low at 1% again as it was before April meeting.

The ECB kept its role as funds provider again with no announcement about new buying bonds plans directly which have been aimed by the markets which have seen offering new 3 years loans or lowering the EU reserve banking rate of deposits at its central banks by 50% to be 1% of its assets instead of 2% from the beginning of next year or even cutting the interest rate meanwhile are not enough and can not replace buying bonds directly by the ECB to restore confidence in the EU bonds markets to fall the risk appetite strongly during the ECB's president press conference which focused on the ECB's offering of cheaper money with no reference to direct interventions injecting funds in the EU bonds markets adding that the ECB is forbidden from monetary financing on the current treaty to the governments referring to that the ECB should stick to the treaty spirit and the governments should do too.

Draghi has shown his surprising too by the understanding of his words of other elements to be done by the ECB in the face of the crisis, in the case of reaching stronger financial unity amongst the EU countries as a hint of buying more bonds on reaching this has been really done last week when he was addressing in front of the EU parliament while the speculation have increased toward these direction from the germane and French side giving the markets high level of cheeriness by the EU summit.

And now, it's the word of the political and financial authorities after the monetary authority has turned the word to it to reach a new accepted modification of the current agreements between the EU suffering from high levels of debt like Greece and the countries which are funding this debt like Germany.

And in the case of germane bowing to their demands, there can be a bigger financial role of the ECB and the IMF which has announced earlier this week that it's in need for more resources to do as long as Germany is still refusing the idea of united bonds issuance.

But in the case of germane refusal there can be imposed sanctions in a new financial treaty on the EU countries which allows its debt to get over 60% of its GDP or its budget deficit to be more than 3% of it.

But between this and that there can be a reached deal for lowering the bonds yields at least over the short term as a joint demand from the countries in debt and the offering countries which have been negatively impacted recently by the crisis and well- exposed to credit rate lowering as S&P credit rating agency has warned earlier by the EU summit this week.

It is also expected from the summit to identify a greater active role of the IMF intervention even it is to be a last defending line behind the FESF as it has been obvious in the EU Fin ministers' meetings last week which could not find recourses to grantee the 1 trillion which has been announced as a new size of it in the recent summit on 27th of October. So, it's important issue to be discussed too in the summit specially as the lack of details about its funding resource has dampen the market sentiment after that previous summit.

The Single currency has fallen during Draghi's press conference well below its previous supporting level at 1.3332 after failing to continue rising above 1.3458 on the ECB assurance that there is no monetary financing in the EU treaty and God willing, in the case of falling further, there can be consecutive supporting levels at 1.3258, 1.3211 whereas the pair has formed its bottom after falling from 1.4245 which has been reached after the EU summit agreement in Brussels on 27th of last October and breaking it can open the door again for 1.3144 which could contain on 4th of last October the pair falling from 1.4939 and breaking it can open the way for 1.3 psychological level which can be followed by 1.2873 whereas the pair has recorded this year low on the 10th of last January.

While its way up can be met by resisting level now at 1.3458 which capped the pair gains yesterday and this can be followed with another resistance at 1.3546 which has been reached after the Fed's coordinated action to lower the USD cost of borrowing with other five Central banks and the ECB was one of them and breaking 1.3546 can be followed directly by 1.3567 which stands before 1.3613 and breaking it can open the door again to 1.3808 then 1.387 which pressed down the pair capping its rising many times last moth putting technical pressure on the pair and breaking it can lead to test higher resisting levels at 1.3959 before the psychological level at 1.4

Kind Regards

FX Market Strategist
Walid Salah El Din