Market pared some of yesterday's sharp losses with the start of the day, supported by the steady German growth at quarterly rate of 0.5% compared to 0.3% in the second quarter, while thin trading is expected today due to U.S. Thanksgiving holiday amid the ongoing concerns over the European dept crises.

The risk aversion sentiment hit the markets sharply yesterday, where the results of the German Bund Auction dominated the scene, intensifying the ongoing contagion fears. Germany sold a 3.65 billion Euros of 10-year government bonds much below the 6-billion target, where the bond sale showed poor demand and the worst results since the start of the euro, triggering more concerns that the heart of the euro zone is not immune from this plague. This was preceded by, the euro zone manufacturing and services sectors' data, where the manufacturing data showed further contraction while the services showed a slight relative expansion compared with previous numbers.

The continuing gloomy news continued to pressure higher yielding assets, sending the U.S dollar index higher to end the day 1.09% higher as a safe haven. The VIX index, which is an important gauge of fear in the markets, inclined 6.29% to close at 33.98 after opening at 31.97.

Technically speaking, The EUR/USD pair ended the day more than 1.00% lower, to close the U.S session at 1.3368 after opening at 1.3463. The pair breached the recent range bound among 1.3430 support and 1.3560 resistance, to continue the drop and print a low at 1.3319, where today a slight rebound occurred and the pair may be heading towards a retest of the breached support of the range around 1.3430, where we expect it to be a good intraday resistance as it coincides with the short term descending resistance that protected price from the 1.4240 top.

However the pair came under renewed pressure, with the breaking news that Fitch has just downgraded Portugal's credit rating to Junk.

In general, trading above 1.3430 may extend the upside correction towards 1.3480 and 1.3550. To the downside the latest low at 1.3320 is the only obstacle toward 1.3240 and 1.3150. In general, the overall bearish short-term outlook for the pair remains intact.

The main headline today is the first meeting for the new Italian prime minister Monti with Merkel and Sarkozy in Strasbourg amid the current market panic, the leaders will discuss the role of the ECB in the debt crisis and the role of re-establishing confidence among investors in addition to the zone's economic policies, supporting comments after the meeting could trigger a relief rally in the market and ease the tension temporarily and support the euro.