The euro drops after the approval of the EU-IMF bailout

By IBTimes Staff Reporter | May 03 2010 6:02 AM

The European single currency fell against majors, especially the dollar, after the EU and IMF accepted to give Greece 110 billion euros to rescue the economy from default and stop credit rating downgrade. The euro responded to yesterday's news negatively as the decision raised concerns that Greece despite the aid may not be able to tackle the huge deficit or other EU countries may ask for a similar aid. The euro, which constitutes 57.6% of the dollar index, helped the index to surge to 82.19 from the day's opening at 81.63 after breaching strong resistance at 81.90.

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With regard to the euro-dollar pair, it is showing decline on the daily charts after rising in the three previous sessions as the EU and IMF accepted to give three year package loans to Greece which sparked speculations Greece may not be able to reduce the deficit to 3% by 2014 in addition to meeting the rage occurring from the austerity measures that will be implemented to cut deficit by another 30 billion euros. On the other hand, today's news showed improvement in PMI manufacturing in the euro zone but it did not affect the euro movements. The pair fell to 1.3234 from the day's opening at 1.3355 but stopped its fall when it got support at 1.3210, while it reached a high of 1.3359 and a low of 1.3204. For the rest of the day, the pair is predicted to move between support and resistance at 1.3175 and 1.3340 respectively.

As for the sterling-dollar pair, it is moving to the downside on the daily charts after the breakout of strong support at 1.5273. The royal pound is still under pressure until the May 6 elections declare a clear winner, especially as the U.K. lacks fundamentals today. Meanwhile, the pair is trading at 1.5234 reaching a high of 1.5334 and a low of 1.5209 while it is expected to move between support at 1.5225 and resistance at 1.5350.

Relative to the dollar-yen pair, it is rising on the daily and 4-hour charts. The breakout of cluster resistance at 93.76 on Wednesday opened the door for the pair to reach 94.03 where it is currently trading. Earlier today, the pair reached a high of 94.13 and a low of 93.82, whereas support is seen at 93.80 while resistance is at 94.80.