Week in FX Europe – EUR Strength, Nope, Dollar Weakness

The 17-member single currency is ending the week confined within a now well-established trading range. A brief post Friday lunch scurry higher failed in its attempt to break through key resistance levels (1.3560-70), and this even after various options expiries helping.

The EUR bulls have become deflated by Italy’s precarious political situation and on rumors that the country itself may soon be downgraded. After encroaching and failing to penetrate its highs, the single currency easily cleared its short-term support on an announcement that Italy is willing to delay its October sales tax hike until next January. The market concerns of Italian debt growing more have the EUR reversing some of Fridays early rally.

If the currency happens to trade through and remains below the 1.3500 handles for a period of time, will certainly open up the possibility of a technical attack on the previous days lows. There are currently a plethora of stops losses beginning to build below the strong support level sub-1.3450. As to be expected, month and quarter end demand usually plays havoc with volatility and the technicals, which tend to dissuade many investors from competing.

• IMF Warns Ireland To Not Ease Austerity
• UK Quantitative Easing Ruled Out Says BoE Carney
• Bank of England Could Increase Powers to Avoid Housing Bubble
• Irish House Prices Rise Mostly Due to Dublin Market
• Eurozone Confidence Jumps More than Forecasted in September
• German Inflation is Helping Domestic Consumption
• Cyprus Still Struggling after EU rescue
• Euro could be next in Currency Wars
• Italian President Pulls Out of Conference to Deal With Political Crisis
• French Business Lobby Not Happy With 2014 Budget
• Former ECB President Urges EU Banking Union
• Greek Deputy PM Says Country Does Not Need Third Bailout
• UK Economy Grew 0.7 Percent in Second Quarter
• EU Assessing Helping Others Outside the Bloc
• German Business Confidence Rises in September
• IMF Sends $1 billion Bailout to Ireland
• New European Banking Rules Will Force Banks to Add Capital
• Bank of England Watching Rising House Prices
• ECB may provide more Cheap Loans
• German Private Sector Grows in September
• ECB Could Offer More LTRO Loans if Needed
• Bank of England Urges Caution in UK Economy Optimism
• Greece Concerned About Merkel Win in Germany
• U.K. Consumer Confidence Improves
• Merkel Gets Biggest Victory Since 1990
• Markets Reaction to Merkel Victory

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