The Single currency which was already suffering from the market focusing on the recent disappointing growth data from EU and the negative impact of the US slowing growth because of the credit crunch and the high commodities and oil prices, has been hit by no mention of its recent excessive decline across the broad by the ECB president after the central bank decision to keep interest rate unchanged at 4.25 %. The market has seen increased growth worries from the ECB which watch the decline of oil and commodities prices cautiously and the growth slow down in the Euro zone. The ECB has not referred to a near coming cut but they have left it to the market as the most option to be expected after the recent hike which was to tackle inflation amid the high oil and commodities prices which are declining currently. The ECB was caring of fighting other rounds effects of inflation. The ECB was especially worried about the wages growth which can build up much more inflation forces and cause jobs cuts amid the current sluggish growth. They have not seen inflation stagnation yet in the near term as the latest provided data.

The market sentiment is still also negatively impacted by these weak data from EU and geopolitical concerns which can increase in the euro area after the recent confession of Abkhazia and southern Austia by Russia. The tension between Russia and the NATO can increase in the future. The single currency could not find strong footing yet.

Technically, closing last week lower than 1.481 was a dovish sign and recording a new low last week after the weak IFO release could put further weights on the pair to make a new low with the beginning of this week at 1.4571 increasing the down trend momentum to make a new low at 1.4212 few hours ago in the seventh dark daily consecutive candle. This rate has not come since 25.10.2007 on a breaking of a short consolidation area its lower band was at 1.4015 which is expected now to be the next support level. 

After better than expected US ISM non manufacturing index of August which has come above 50 in the expansion area at 50.6 and the market was waiting for just 49.4, the greenback added more gains across the broad. Today, we wait for the release of August US non-farm payroll which is expected to be -73k from -51k in July.

Best wishes

FX Consultant

Walid Salah El Din

E-Mail: mail@...http://www.fx-recommends.com