The Single currency came under strong pressure on increasing worries about the Euro area growth outlook after the ECB has downgraded its forecasts of the growth in 2011 and 2012 without hinting about new steps to stimulate the economy. While the worries about the debt crisis worries are still persisting weighing negatively on the current market sentiment.

The single currency has fallen below 1.395 supporting level yesterday following Trichet's comments about the downside risks facing the European economy currently which have elevated since the ECB meeting of August and today with these worries persisting before the G7 meeting this weekend, the single currency downward momentum has increased and with the falling of I.3838 supporting level versus the greenback, the selling pressure has accelerated causing falling of another strong supporting level at 1.3744 versus the greenback which is underpinned by the current risk aversion which is weighing down on the equities markets in EU and US driving up the bonds prices driving the US 10 years treasury bonds yields down to 1.96 below its previous historical level at 1.97 which has been recorded in the beginning of this week after the US markets have opened last Tuesday negatively impacted by the European stocks markets loses because of the rising worries about the economic growth outlook in the euro zone too amid requests for implementing austerities measures

by cutting the governmental spending and hiking the taxes in the European debt ailing economies which can be another hard obstacle in the face of the growth in this area amid growing concerns about the global economic outlook driving the business confidence down with the current great deal of uncertainty about the EU debt crisis.

From another side, The Swiss frank has come under pressure as the SNB's action to put a floor against EURCHF depreciation below 1.2 has helped USDCHF to go up above 0.88 capping the Swiss Franc from getting more benefits as a safe haven from this current dovish sentiment and losing of confidence for taking risks by the investors.

While the greenback is still finding strength from another side by no clear reference about QE3 by the Fed despite the recent dovish release of Beige Book which has shown clear weakness of the US economic performance but there was no hinting again from Bernanke's speech yesterday putting more pressure on the investors' risk appetite..

God willing, further EURUSD declining can be met with another supporting level at 1.3523 and in the case of breaking it, there can be a new supporting level to be faced at 1.3424 and the breaking of it can open the door for further falling to 1.2873 which has been recorded on the 10th of last January while the way of ascending can face difficulties at 1.3838 which has become a resistance then 1.3933 whereas the pair has formed its bottom after failing to get over 1.40 earlier today.

Kind Regards

FX Market Strategist
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com