As expected, the ECB has tried to restore confidence in the European debt anyway announcing the extending of working its buying bonds plans aiding the debt ailing economies. The single currency has been dragged down below 1.31 to 1.306 again before bouncing back to trading currently just above 1.32 as the investors have seen in these announced increasing of what is offered of Euros to the market devaluating of its value but in the same time, this has restored confidence in the market improving the risk appetite driving the equities prices up weakening the greenback further as this is to give stability to the bond market and calming down the investors worries which contained the market sentiment recently and reducing the European debt exposure of these countries at least in the short term putting unavoidable carried risks on the shoulder of the ECB which can hurt the single currency and has been criticized by the germane government and the Bundesbank President's Alex Weber who has ensured on the need of market sharing of these carried debt risks but this is still looking very difficult to countries like Ireland needs the offered unlimited assistance ECB and even the Portuguese and Spanish who are still paying higher costs of their sold debt while Germany is having strong growth rate reached .7% in the third quarter can underpin its situation while the EU GDP average of this same period has been just .4%.
The single currency next waited resistance should be at 1.33 versus the greenback then the area between 1.3385 and 1.3425 which should form difficulty to be passed and getting over it can open the way to 1.359 following by the recent previous top at 1.379 and this can be a stronger level as breaking it can open the way again to 1.4 psychological level while the way down should be met by supporting level at 1.306 then the main supporting level at 1.297 whereas the pair has met new buying interest recently and where the pair has formed a previous intermediate bottom of its rally which has ended to 1.428 and breaking it can lead to 1.26 as the main bottom of this previous ascending rally which has ended by the release of US non-farm payroll of October which has come better than expected adding 151k after losing 41k in September while the market was waiting for adding just 60k encouraging the investors to take profits covering their greenback selling as the Fed has actually taken its waited decision of adding another 600B$ to its adopted quantitive easing policy of buying US treasuries till the end of June 2011 but this was just a beginning as the greenback has continued its rising across the broad fueled by the market worries about the debt situation of the European countries again which increased in November containing the market sentiment weighing negatively on the single currency and the risk appetite of the investors which has been hurt again by the tension of the semi Korean island which tempered the markets pushing the inventors to square further their carry trades buying back the greenback and god willing, we wait again today for US non farm payroll release which is expected to be 145k from 151k in October and also we have today the US factory orders of October to get down by .7% after rising in September by 2.1% and US non-manufacturing indexes to be 54.7 from 54.3 in October.
Best wishes
FX Consultant
Walid Salah El Din
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