The single currency is still trying to cross the area from 1.3385 and 1.3425 versus the greenback and if it could get over this area, this 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 at 1.4281 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 which was weighing negatively on the greenback but this greenback buying sentiment has not stopped there as the profit taken wave has found momentum from the market worries about the debt situation of the European ailing countries which increased in November containing the market sentiment weighing negatively on the single currency to get down below 1.30 and hurting the risk appetite of the investors which has been hit once again by the tension in the semi Korean island hurting the markets pushing the inventors to square their carried trades further buying back the greenback and the Japanese yen and pushing the gold to get over 1380$ resistance breaking above 1400$ psychological level again underpinned by the rising of oil prices which are widely expected in the markets currently to go above 100$ next year with the recovery getting momentum and also the ECB promises to give unlimited funding of the European debts pushing its yields down moving their prices up reducing the European debt exposure of these ailing countries at least in the short term putting unavoidable carried risks on the shoulder of the ECB by a huge ample of liquidities can be injected in the nerves of the EU economies as we have seen recently the recent successful Portuguese and Spanish auctions helping the Single currency to find support finally at 1.297 last week despite the rising of the costs of covering these auctions but Trichet's comments about the ECB readiness and sticking to its previous pledges of buying bonds could restore more confidence in the markets helping the European equities market to keep its last week gains which triggered by these auctions despite the weaker than expected US labor report of November has contained the market sentiment by the end of the week as it has shown an unexpected rising of the unemployment to 9.8% from 9.6% in October and disappointing figure of the non-farm payrolls were expected to be around 150k shocking the market by adding just 39k weighing negatively on the European stocks market which started this week contained by the probability of having more added funds to the current offered bailing out package with the IMF which can have more funds from US for this purpose but as it was expected, Merkel has come out to rule out going forward to this in the near term which supported the single currency but that does not object that there can be a need of this later and before 2013 when the working of this current one ending if the debt position of those ailing countries exacerbated and faced further weakness of their growth pace lagging behind Germany which has grown by .7% in the third quarter this year while Greece has shrunk by 1.1 while the EU growth average was just .4% and this growth weakness can continue as long as we see the US investment and consuming spending are still struggling and unable to create enough jobs to move the growth up sacking for further help from the Fed which may fund itself forced to inject more and more funds pushing the commodities and energy prices globally up while US has not get out from the risks of deflation forcing the other countries and especially the Asian to curb the investment and cooling their economies as we see in Korea and China currently criticizing this easing policy of US which is hurting their economic growth.
Best wishes
FX Consultant
Walid Salah El Din
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