EUR/USD Technical/Fundamental Analysis 06.13

Euro dollar consolidates its losses in a lower range. While many European countries are on holiday, the uncertainty about Greece weighs on peripheral bonds, including Spain. Here's a quick update on  what's going on in the markets.
EUR/USD Technicals Asian session: The pair dipped to 1.4318 before climbing back to resistance and settling in range. Current range 1.4282 - 1.4375

Further levels in both directions: Below 1.4282 1.4160, 1.4030, 1.3950, 1.3860.

Above: 1.4375, 1.4450, 1.4550, 1.47, 1.4775, and 1.4882.

The old peak of 1.4282 is important support with the critical 1.4030 still in the distance.

1.4375 is only minor resistance before 1.4450.EUR/USD Fundamentals

14:00 ECB president Jean-Claude Trichet talks.

For more events later in the week, see the Euro to dollar forecast

EUR/USD Sentiment

German banks ready to contribute: Over the weekend, it seems that pressure for restructuring of Greek debt pushed the German banks to volunteer to participate in Greek losses. This joins approval from Jean-Claude Juncker to the German plan and a comment made by a senior German adviser that a Greek default could be weathered. The ECB is cornered.

• Strong vigilance, but other worries: Trichet did make the expected hint for a rate hike using the code words "strong vigilance". On the other hand, he expressed concern over the global economy, repeated the "strong dollar policy" and also continued to reject any Greek restructuring. The fall of the euro that began during the presser continued. We'll get more of Trichet now.
• Contagion risks in Ireland: There are fears in Ireland that a Greek restructuring will hammer Irish bonds, sending them to junk status and keep Ireland away from the market for too long. An Irish minister saw "benefits" for Ireland in the German plan.
• Contagion risks in Spain: As the new governors and mayors begin working after the local elections on May 22nd, the worries about Greece send Spanish bonds to test the peak levels. 10 year notes now yield above 5.5%, after a calm month. The critical level is 5.60%. The new authorities might reveal a huge pile of hidden debt

Bitcoin Triples Again-The Future Of World Currency

The online currency has minted off-line millionaires.  

The world's fastest-gaining currency has tripled in price again. Last week, SmartMoney reported that the Bitcoin had exploded from an exchange rate near zero to more than $10 in about a year, making it one of the top-returning assets of any kind. On Wednesday the currency topped $30. If returns like those seem otherworldly, perhaps its because Bitcoin is a world unto itself. To recap, it's is a purely online currency with no intrinsic value; its worth is based solely on the willingness of holders and merchants to accept it in trade. In that respect, it's not so different from fiat currencies like the dollar or Euro, but whereas governments back such money, Bitcoins lack central control. In another way, the appeal of the Bitcoin echoes the appeal of gold. Instead of a central bank, a computer algorithm dictates their supply. Today there are six million Bitcoins, a number that will grow at a steadily slowing rate until it approaches 21 million, but no more. As with gold, some see such limited supply as built-in protection against inflation that could result from runaway government budget deficits. Gold, of course, has been a store of value for thousands of years and has at least some industrial use, whereas Bitcoins are brand new and exist only on the Internet. For some early adopters, Bitcoins have turned from a hobby into a windfall. MtGox  the main exchange for users swapping Bitcoins for dollars and other currencies, charges buyers and sellers a fee of 0.65% for its brokerage service. (The name stands for Magic the Gathering Online Exchange, but the Bitcoin dabbler who bought the domain didn't bother to change it.) As recently as a few months ago, the site generated just pennies a day in income. By Wednesday it was making more than $40,000 a day. Mt. Gox, needless to say, is not a regulated exchange, so its pricing and liquidity data aren't subject to any review or verification. Mt. Gox didn't respond to an email request for comment. The site offers no customer service phone number. The largest Bitcoin account holder -- who is, of course, anonymous -- has 297,000 units of the start-up currency, according to Donald Norman, a spokesman for the The Bitcoin Consultancy, which offers advisory services for institutions interested in Bitcoin transactions. At $31 per Bitcoin, that's equivalent to $9.2 million. Bitcoins are accepted by a limited number of merchants for services, such as website design, and some goods, such as music and clothes. The anonymous nature of the currency has also led to brazen use by drug dealers, including ones who hawk their merchandise on Silk Road, a website than can only be reached through a network that cloaks the identity of its owner. Lawmakers are not amused. "The only method of payment for these illegal purchases is an untraceable peer-to-peer currency known as Bitcoins," wrote Sens. Charles Schumer of New York and Joe Manchin of West Virginia this week in a letter to the U.S. Attorney General and the Drug Enforcement Agency. Cash, Bitcoin advocates are quick to point out, is also an anonymous payment system used to buy drugs, and Norman says the focus on drugs is sensationalistic and misguided. "It would be sad if the growth of Bitcoin was stunted because of this criminal byproduct," he says. "Bitcoin is going to change the world in the same way the Internet did and make societies freer." It's not clear that U.S. law enforcement agencies could regulate Bitcoins if they wanted to. The currency runs on software similar to the file-sharing software used to download music and movies, technology the entertainment industry has been trying unsuccessfully to quash for years. There's no headquarters, main server or central bank to visit, just a network of thousands of users. It's also not clear whether U.S. regulators would have jurisdiction over a global, virtual currency. Last week, a spokesman for the F.B.I. said he was unaware of Bitcoins and would check into the Bureau's position on them. Subsequent calls for comment have not been returned. Readers tempted to bet on the Bitcoin should resist, not least because it's unclear whether it will have any enduring worth. Beyond what fans say are the currency's design advantages, its chief appeal at the moment is surely that it's soaring in value. As of now, today is the first day in more than a week that the currency didn't hit a new high. And when the gains stall, the fall that follows may be as breathtaking as the rise.

EUR/USD WEEKLY TECHNICAL REVIEW 06.12

In the previous EUR/USD Weekly Review, we noted that the US NFP was worse than expected and that the American economy is really not out of the danger zone yet. Mounting debts are a threat and the low interest rate threatens to erode the value of the US Dollar. On the other hand, while the Euro Zone’s diversity complicates efforts to cooperate, it also shields the entire Euro Zone from an immediate complete melt down when financial crisis strikes. Looking at the EUR/USD chart above, the currency pair is currently in a steep drop. Slicing through the 1.44 line like butter, if the bearish pressure persists, we may be looking at 1.42 next. It seems that the market is not ready for a higher Euro currency for now as the EUR/USD tried unsuccessfully to break beyond 1.46+. From a technical point of view, the currency pair will be bearish unless it consolidates and holds above 1.44. The main highlight of the week was probably the Euro Zone minimum bid rate which remained unchanged at 1.25%. While a number of investors hoped that an interest rate hike was done, the market was relatively unsurprised with the move. Having said so, comments from the European Central Bank ECB indicated that there might be differences regarding the solution to the Greek deficit crisis and the market took that badly. Despite previous developments regarding the continuum of a Greek solution, possibly involving a further bailout and even private involvement, individual ECB officials deferred in their take on the situation. It may be possible that Greek developments may continue to steer the Euro currency next week.