God Willing, The single currency is in need now to confirm its breaking of 1.342 level which can open the way to 1.359 following by the recent previous top at 1.379 and this can form 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 levels at 1.338, 1.318, 1.306 then the recent supporting level at 1.297 whereas the pair has met new buying interest recently and where the pair has formed its previous bottom and breaking it can lead to 1.26 as the main bottom of its previous ascending rally which has ended at 1.4281 versus the greenback which was under pressure yesterday versus the single currency as the market sentiment has been possessed by decision of the Chinese central to keep the interest rate unchanged after it has requested from its banks reserve requirements to be increased by 0.5 percent to be the sixth time this year for curbing the inflation upside risks as the most preferred way to the Chinese until now than hiking the interest rate or letting the Yuan to appreciate further under the American pressure but this decision to keep the interest rate unchanged was a proof to the market that china is not rushing to do this right not which helped the commodities and energy prices to rise putting pressure on the greenback on increasing of the risk appetite of the investors who are cheered by this week European leaders meeting hoping for reaching what can restore more confidence in the European debt but it looks that there are difference in their opinions besides this week important Irish decision about the budget and the need for taking more austerity measures which can temper this market sentiment hurting the single currency again after it could get above 1.342 following this wave of greenback selling and rising of the European equities markets helping the US stocks to open up before giving back these gains with the closing of the European markets to end it nearly flat yesterday waiting by god's will for today Fed's meeting results which can include new adding to its quantitive easing policy after the recent disappointing release of US labor report of November which has shown rising of the unemployment rate to 9.8% from 9.6% in October and lower than the market expectations non-farm payroll added just 39k while the market was waiting for about 150k which shown that the US labor market is still struggling and there can be further existence of the deflation pressure on it which is fearing the Fed and may lead to further easing steps which can hurt the greenback pushing the commodities and energy prices globally up while US has not get out from these risks of deflation forcing other countries and especially the Asian to curb the investment and cooling their economies as we see in Korea and China which increased its banks reserve requirements six times this year by 0.5 percent for curbing the inflation upside risks as the most preferred way to the Chinese until now than hiking the interest rate or letting the Yuan to appreciate further criticizing this US quantitive easing policy of US which is causing a devaluation of the greenback hurting their economic growth and their exports and in the same time helping to tightening the US trade deficit which came down in October to 38.7b$ from 44.6b$ in September while the market was waiting for 44.8b$ and as long as the US labor market is still in need of supporting, there will be no clear end of this easing policy and tax cuts in US which can be kept longer this week since declaring them during Bush's presidency in another way of easing can hurt the US budget and treasuries prices driving the US treasury yields up as we have seen by the end of last week.
Best wishes
FX Consultant
Walid Salah El Din
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