Despite it is not expected today to have new clues about the Spanish banking bailing out plan waiting for more reports about its banking sector, the market will be waiting for more details about the banking supervisory of the ESM by ECB and the using of its funds in buying bonds directly too after the recent EU summit agreement by the end of last month.
The EU Fin ministers had mentioned previously in a teleconference before that EU summit that it is important to support the Spanish banking sector releasing their plans to fund it from EUR51 to 62b fearing of more negative sequence in the EU financial markets driving up the bond yields of the peripheral countries to higher rates.
The single currency could raise its head over 1.23 versus the greenback in the European session but it come back to trade below after it had broken its previous supporting level at 1.229 which supported it to rise to 1.2747 last month before easing back again.
The pair had refused to end last week before getting below this level which could hold after May US non-farm payrolls which came at 69k about a month ago highlighting the possibility of further easing measures to be taken by the Fed affecting negatively of the greenback.
But this dovish figure of June US non-farm payrolls which came to show adding 80k while the market was waiting for adding 100k from 69k in May have been revised to 77k was not significant enough to trigger more speculations for easing steps by the Fed pushing up again the greenback which has been supported from another side by the risk aversion to press down on the single currency which looked in the same time still negatively impacted by the increasing speculations of having further easing steps by the ECB after its dovish assessment of the economic status in EU to weigh down on the single currency interest rate outlook differential between it and the greenback following the ECB's recent action to cut all of the key interest rates of the Euro by 0.25% last Thursday.
God willing the market will be also waiting for important events as the German parliament voting on the ESM while it is important to know more about what was behind the recent Fed's decision of extending its treasuries twist operations by 267.5% keeping its same buying monthly rate at 44.4% to detect whether there is a direction for taking more easing steps soon or not with the recent Fed's minutes release next Wednesday.
God willing, EURUSD can have supporting level now at 1.2255 which could hold in the beginning of this week and if it is to be broken, the pair can meet another support 1.2151 and its breaking can open the way for 1.1876 again whereas the pair has rebounded forming its bottom on 7th of June 2010 which drove the pair later to reach 1.4939 on 4th of May 2011 whereas the pair has started easing back again while the pair ascending back way can be met by resisting level now at 1.2402 which has been supporting level previously before 1.2543 and its breaking can lead to 1.2693 which has been reached following the recent EU summit before 1.2748 which has been reached after the recent parliament elections in Greece again 3 weeks ago but the single currency failed to continue rising versus the greenback over it while crossing above it can be met by a higher resistance at 1.2822 before the psychological level at 1.30 which its breaking can open the way for more resisting levels at 1.3063, 1.3180 and this can be followed by 1.3281 which its breaking can open the way to 1.3384 again before 1.3489 whereas it has formed its recent top and in the case of breaking 1.3489.
FX Market Strategist
Walid Salah El Din