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The Week Ahead Forex and Dow Jones recommended levels EUR/USD - Euro Dollar, European Session - 05/09/08 More EUR/USD

The euro fell sharply vis--vis the U.S. dollar today as the single currency tested bids around the US$ 1.5670 level and was capped around the $1.5795 level. Technically, todays intraday low was right around the 50% retracement of the move from $1.5305 to $1.6040. The common currency was dented by a further deterioration in energy prices as NYMEX crude oil futures for September delivery traded as low as a $124 handle. Comments from U.S. Treasury Secretary Paulson added to the dollars gains as did remarks from Philadelphia Fed President Plosser. Paulson noted a strong dollar "is really very important" while Plosser again noted escalating inflation may result in higher interest rates before labour and financial markets recover. Traders await comments from Federal Reserve Governor Mishkin later in the day and the release of U.S. existing home sales data tomorrow followed by new home sales data on Friday. In eurozone news, the German July Ifo business sentiment index will be released tomorrow and many economists see it printing around 100.2. Data released today saw EMU-15 May industrial orders off 3.5% m/m and off 4.4% y/y. German Chancellor Merkel warned 2009 economic growth will likely be below 2008s level. Euro bids are cited around the $1.5645/ $1.5230 levels.

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