Euro remains pressured by the uncertain on who will provide financial aids to Greece to resolve its debt problems. There are rumors that the situation has become increasingly pessimistic for concrete assistance at next EU summit on March 25 and Greece may eventually need to seek IMF assistance during Easter. Greece Prime Minister Papandreou set a one-week deadline for EU to craft the mechanism for the financial aid and said he may turn to IMF otherwise. German Chancellor Merkel's chief finance spokesman Meister said yesterday that nobody apart from the IMF has the instruments to push for Greece to restore its capital-markets access and attempting a Greek rescue without the IMF would be a very daring experiment. The comments signaled a rift with Merkel and European leaders ECB Trichet, Luxembourg's Jean-Claude Juncker and France's Sarkozy. Also, it's believed there are now at least three other Eurozone nations that are open to the idea of calling the IMF if needed, including Finland, the Netherlands and Italy.
Dollar is steady in range against other major currencies in early US session. Philly Fed index rose to 18.9 in March. Leading indicators rose 0.1% in February. Headline CPI moderated more than expected from 2.6% yoy to 2.1% yoy in February while CPI core dropped from 1.6% yoy to 1.3% yoy. Jobless claims remains high at 457k. Other data released today saw Swiss ZEW rose to 53.8 in March, trade surplus shrank to CHF 1.29B in February, industrial production rose 6.4% qoq in Q4. Eurozone trade deficit was at EUR -2.3B in January. UK public sector net borrowing came in less than expected at GBP 12.4b in February. M4 money supply grew less than expected by 0.2% mom, 3.6% yoy in February.
Euro's weakness is apparent across the board, in particular against commodity currencies. EUR/CAD extends recent decline to as low as 1.3791 so far and is still in progress for 100% projection of 1.7499 to 1.5183 from 1.6006 at 1.3690. Break of 1.4102 resistance is needed to be first sign of bottoming or outlook will remain bearish.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3703; (P) 1.3760; (R1) 1.3794; More.
EUR/USD drops to as low as 1.3647 today and remains soft. As noted before, break of 1.3641 minor support will indicate that consolidations from 1.3443 has completed at 1.3817 already. In such case, intraday bias will be flipped to the downside for retesting 1.3435 low. Break will confirm that whole fall from 1.5143 high has resumed. On the upside, in case of another rise, we'd continue to expect upside to be limited by 1.3852 (38.2% retracement of 1.4578 to 1.3443 at 1.3861) and bring down trend resumption.
In the bigger picture, outlook remains unchanged. The three wave rise from 1.2329 is treated as consolidation to fall from 1.6039 only and should have completed at 1.5143 already. Fall from 1.5143 is tentatively treated as resumption of the whole down trend form 1.6039 and should target a new low below 1.2329. Break of 1.4217 support turned resistance is needed to invalidate this bearish view. Otherwise, we'd expect fall 1.5143 to continue even in case of strong rebound.