Tracking the Euro on Greek Downgrade and Pre-Armageddon Friday

The Euro is being watched closely by investors as Greece debt problems continue, Spain protests spread, and the German economy is predicted to weaken in the second half of the year. The EU has hinted of being open to assist Greece debt problems, but no solution has been compromised so far. Spain's protests continue to spread through out the country, as protesters demand jobs and answers about the former Government “hidden” debts.

The EUR/USD was trading at the 1.4342 high this morning, but has dropped to the 1.4210 low. Two important technical resistance lines to look for would be the minor resistance line of 1.4440 and the major resistance line of 1.4586. On the downside, we have the 1.4048 low, which is separating the price action to the next major support line of 1.4020.

Relevant technical analysis levels to watch:

• Trading range for the currency pair today: 1.4210 to 1.4342
• Today’s low: 1.4210
• Minor resistance line: 1.4440
• The major support lines: 1.4020, 1.3854, 1.3750, 1.3524, 1.3427
• The major resistance lines: 1.4586, 1.4936, 1.5144, 1.5332, 1.5700
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Fundamental analysis:

• EU: German Producer Price Index at 2:00AM EST (+1.0%)
• EU: European Central Bank Current Account at 4:00 AM EST (€ -4.7 billion)
• US: Federal Open Market Committee Dudley will be Speaking at 8:00 AM EST
• EU: Consumer Confidence at 10:00 AM EST (-10)
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Sentiment:

• Greece is encouraging investors to buy their high risk assets
• Spain’s 2 Year Yields hit the worst level in a year at 3.6%
• German Finance Minister hints that Europe will decided soon on a new International Monetary Fund candidate, taking place of Mr Strauss-Kahn as he faces sexual assault chargers in New York
• Rumor: Ireland will need another bailout
• Rumor: Protests from Spain are spreading to Italy
• U.S Stocks are trading at a low level on Friday, Retail numbers are not impressive
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Overall Picture:

The EUR/USD has been on an upside channel, since hitting the 1.2872 low. The upside channel from the 1.2872 support to the 1.4936 high has retraced back to the 1.4048 level. The currency pair has dropped 5.9%, since May 4th, 2011.

The price action started dropping, when investors were worried about Greece defaulting on its debts. Investors went on a selling spree and the Euro lost confidence of the bulls. To add further to the uncertainty, the EURO Zone has not been able to compromise a solution for Greece, because of political backlash and unfavorable sentiment of their countrymen.