Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
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Easy there, big fella. The euro bulls stepped back from their shopping frenzy yesterday when markets turned their focus to Portugal’s political hoopla. EUR/USD slipped by 30 pips to 1.4196, EUR/JPY slid by 31 pips, and EUR/CHF went down by 43 pips on rumors that Portugal might need a bailout. Yipes!

No economic reports were released from the euro zone yesterday, but Portugal has been hogging the region’s spotlight lately with talks of a possible bailout. Word around the forex grapevines is that Portugal’s opposition is threatening to reject the new austerity budget set for a vote today. If the budget does get rejected, Portugal will have a harder time paying their debts, and might even need a bailout.

While we wait for Portugal’s big standoff though, you might want to pay attention to other reports coming from the region. At 10:00 am GMT we’ll get hold of the industrial new orders report for January. Then, at 2:00 pm GMT we’ll also see the Belgium business climate for March. Lastly, the euro zone’s consumer confidence report will come out at 3:00 pm GMT. The data logged in an index number of -10 in February, so a higher figure might help the euro bulls give their lovin’ back to the euro.

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No mercy for the euro!!! Political problems in Portugal had the euro beggin’ for mercy as it ended the day lower against its major counterparts. Economic reports also did little to give it a hand as feedback on the economy was mixed yesterday. In the end, EUR/USD finished 108 pips lower at 1.4088

The way the Portuguese parliament treated the proposed austerity plans reminded me of Patrick Ewing’s prime–rejections all around! As if its debt problems weren’t a big enough headache, the Portuguese government faces the risk of collapsing now that the parliament has given the belt-tightening plans a thumbs down. Obviously, this isn’t a situation risk averse investors want to get involved in, which is why the euro ended lower.

As for yesterday’s data, we had a bit of good and bad news. Industrial new orders didn’t grow as much as anticipated. January showed just a 0.1% rise instead of the 1.4% increase, partly because of a big drop in heavy transport orders.

On the upside, the Belgium NBB business climate report showed a stronger-than-expected reading of 6.2 (versus forecasts for 5.1) for the month of March. The index has recorded a rise for 9 straight months now, indicating consistency in the improvement of business conditions.

Today, we’ve got a whole mess of PMI reports coming our way. France is due to publish its manufacturing and services PMI data at 8:00 am GMT while Germany will be rolling out its reports at 8:30 am GMT. Thirty minutes after that, the region-wide versions will be available. Keep in mind that it’s better to take these reports together rather than individually as it gives us a clearer picture of the overall situation in the euro zone. Good luck out there, guys!

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The euro must’ve been grooving to Mariah Carey’s song “Shake It Off” yesterday as it brushed aside the bad vibes that weighed it down the other day. After dipping to a low of 1.4053, EUR/USD made a comeback and closed at 1.4177.

It seems that the euro has already moved on from its recent setbacks. Last I heard, credit rating agency Fitch downgraded Portugal’s debt after Prime Minister Socrates resigned. With that, Portugal is left with a weak and divided government who should deal with its bulging budget deficit. But, judging from the euro’s movement, it looks like traders are confident that EU officials could come up with a solution to this problem during the ongoing summit.

Also, strong economic figures from the manufacturing and services sectors of the euro zone’s two largest economies provided the euro some support yesterday. Only Germany’s manufacturing PMI failed to meet expectations as it fell from 62.7 to 60.9 in March.

For today, Germany is set to release its IFO business climate report, which could dip from 111.2 to 110.6 this month. Worse than expected results could force the euro to give up some of its recent gains while another strong figure could fuel its rally. Make sure you stay tuned for that report due 9:00 am GMT.

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With the markets concerned about the Portuguese debt situation, the euro found itself on the losers’ table despite the better than expected German IFO release. EUR/USD closed last Friday at 1.4088, 90 pips down from its opening price. Interestingly, the pair has gapped down 63 pips to open the week at 1.4025. Could this be a sign of things to come?

The German IFO business climate report came in at 111.1, just a shade under last month’s release of 111.3, and higher than the forecasted 110.6 figure. Normally, this would have given the euro some nice support, but last Friday, there was bigger news rocking the markets.

Standard and Poor’s decided to follow Moody’s lead and downgraded Portuguese debt from A- to BBB, which shouldn’t come as too much of a surprise. After all, Portuguese PM Socrates just resigned after parliament failed to pass his party’s proposed budget and austerity measures plans, leaving the government in disarray.

S&P’s decision caused LCH Clearnet to declare that they wouldn’t accept Portuguese bonds for delivery for its RepoClear Baskets. What this basically means is that LCH Clearnet (who is one of the largest clearing houses in Europe) believes that Portuguese debt is too risky to be holding right now.

On the bright side, it seems that EU leaders are one step closer to setting up a permanent bailout fund. During the EU summit last Friday, EU leaders agreed on 500 billion EUR bailout fund, which will be called the European Stability Mechanism. The only problem I see is that this system will only be put in place in 2013.

I wonder though, if both Portugal and Spain need bailouts, could the EFSF program be expanded? I highly doubt that the current program will be enough to handle a bailout for both countries. Don’t be surprised if in the next few months we see an expansion of the program to help accommodate any near-term bailout risks.

In other news, Angela Merkel lost a key election in the German state of Baden-Wurttemberg, marking the latest in a series of losses by her CDU party. This political uncertainty is probably why EUR pairs gapped down over the weekend.

Looking ahead, no hardcore data on deck today, but do watch out for ECB President Jean Claude Trichet’s speech today at 3:00 pm GMT. Watch out for any comments about Portuguese debt or inflation, as any mention of those two key topics could cause a ruckus in the markets.

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It may be down, but the euro is definitely not out! Thanks to ECB President Jean-Claude Trichet’s hawkish rhymes, the euro was able to stage a strong comeback yesterday. After a weak start to the week (a 63-pip gap down yo!) EUR/USD bounced to close the weekend gap and finish at 1.4092.

With no data to support its climb, the euro had to make do with Trichet’s hawkish words. In his speech yesterday, the ECB big boss reiterated his stance on inflation and continued hinting about a possible rate hike in the near future.

With the ECB’s next interest rate decision just a week away, euro traders seem to have been blinded by the possibility of a rate hike, forgetting about the debt issues surrounding Portugal. Such short-term memory these markets have!

If you’re looking to trade the euro today, be sure to catch Germany and France’s releases. At 7:00 am GMT, the German preliminary CPI report is due and is expected to show a 0.4% increase in prices, a figure slightly softer than the 0.5% increase we saw last month. A stronger-than-expected reading here has the potential to trigger a mini-rally as it would confirm Trichet’s inflation fears.

Then at 7:45 am GMT, French consumer spending data will be available. A nice rebound to the tune of 0.6% is expected after January’s disappointing 0.5% decline. As always, be sure to stay alert for any surprises that may catch the markets off guard and spur sharp moves in the euro!

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Now we’ve got ourselves a fight! The battle over EUR/USD was intense yesterday, but the euro was able to edge out a win over the USD. The pair finished the day just 11 pips higher at 1.4103 after the two currencies duked it out amid upbeat euro zone data and hawkish words from the Fed.

The euro took the early lead yesterday as reports from the region printed in the green.

GfK German consumer climate index came in as expected at 5.9, while German CPI and French consumer spending data exceeded expectations. German CPI revealed a 0.5% rise in prices, a repeat of the previous month’s increase. Likewise, French consumer spending data was upbeat, showing a 0.9% rise to show a nice rebound from the previous month’s 0.3% decline.

But the tides turned against the euro midday as hawkish words from Fed member Bullard sent EUR/USD tumbling. Bullard hinted at a possible rate hike in the near future, which sort of levels the field for the dollar in terms of interest rate differential. If the Fed follows the ECB’s lead and continues to suggest monetary tightening, it sort of nullifies the euro’s advantage.

The economic docket is empty for today. In the meantime, be sure to check in on the U.S.’s ADP report if you plan on trading EUR/USD. Peace out, kiddos!

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Duhn, duhn, duhn! It seems like the euro was trading nervously against the dollar yesterday. EUR/USD consolidated below the 1.4000 psychological handle for the most part, and it wasn’t until later in the New York session that it was able to rally past resistance and end the day with a 23-pip win at 1.4126.

The economic front was clear yesterday, without any report on tap from the euro zone. My guess is that traders are being careful ahead of Ireland’s stress test results which are going to be released today.

Economic gurus are speculating that the Irish government may need to take over two banks. What?! Yep! You read that right. Two banks may just follow the footsteps of Allied Irish Banks PLC in crying out “Mommy!” to the government to help fix their balance sheets. What’s more is that it is estimated that around 25 billion EUR will be needed to save the Bank of Ireland and Irish Life & Permanent PLC.

If the amount of moolah needed is more than this figure, the euro may just lose its gains. Heck! A figure bigger than the 35 billion given by the EU and IMF to Ireland as its bailout money may even be disastrous for euro bulls. Setting the pessimism aside though, if the amount needed is smaller than the estimate, the shared currency may continue to rally.

Other than that, make sure you also keep tabs for what’s on deck on our economic calendar for today.

At 6:00 am GMT, we’ll have Germany’s retail sales report on tap. It is expected that consumer spending remained steady in February, growing at the same pace as it did the month prior by 0.4%. Then at 7:55 am GMT, we’ll get dibs on the country’s labor market with data on unemployment change. Analysts have predicted that the number of unemployed people decreased by 23,000 in February and the unemployment rate slowed down a bit during the month to 7.2% after coming in at 7.3% in January.

There are also a couple of inflation reports scheduled to be released today too. Be on your toes for higher-than-expected figures as they would probably fuel the euro in today’s trading as they would get talks goin’ about an interest rate hike from the ECB.

At 6:45 am GMT, France will release its PPI figures for March and it is expected that producer prices increased by 0.8% during the month. The overall CPI reading for the entire euro zone will also be on tap at 9:00 am GMT. Take note that the consensus is for inflation pressures to have remained steady at 2.4% for March.

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Yesterday, the euro zone announced that it’ll be ditching the euro and will be making m&ms its official shared currency. Psych! April Fools’ yo! Haha! Jokes aside, a stronger than expected CPI reading and not-so-bearish results from Irish stress tests allowed the euro to hold its head high yesterday. EUR/USD ended the day 48 pips higher at 1.4173 just as EUR/JPY surged 80 pips to close at 117.90.

After much anticipation, Ireland finally released the results of its most recent stress tests, which were actually not THAT bad! It was announced that four of Ireland’s biggest banks had a collective shortfall of 24 billion EUR, just slightly under the 25 billion EUR figure that most were expecting to see.

Since the actual results were more or less in line with expectations and the losses are well covered by the 35 billion EUR that was allotted by the EU/IMF, there was no need for additional bearishness, and the euro was able to hold its ground.

To address their problems, the tested Irish banks plan to take different approaches. Bank of Ireland will sell off some of its assets and Irish life will probably be nationalized, while the remaining two banks (EBS and Allied Irish) will merge into one. The sad news is that taxpayers will bear the brunt of the burden since they’ll be funding most of the shortfall. Ouch!

With the Irish stress test drama behind us, we can finally shift our attention back to ECB rate hike possibilities! Yesterday, the euro zone’s CPI flash estimate for March revealed a stronger-than-expected reading of 2.6% to beat forecasts for a repeat of February’s 2.4%. With prices still trending up, the markets seem more convinced than ever that the ECB will raise rates in its rate announcement next week.

Before you head off to your wild Friday night parties, check out today’s employment data releases. You may just be able to make some last minute pips. You can never have too much moneyz for the honeyz yo!

At 9:00 am GMT, the euro zone is due to publish its unemployment rate for February. Chances are the report won’t stir up the markets too much since forecasts have the unemployment rate staying steady at 9.9%. But if its action you went, then you may want to trade the U.S.’s NFP report (12:30 pm GMT), which is almost guaranteed to shake things up.

Remember to have fun out there! It’s April Fools’ after all! Just be sure not to get whiplashed, kids!

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Talk about a comeback victory! The euro recovered from a low of 1.4062 against the dollar to finish the day 50 pips higher at 1.4223 as traders continued to buy up the shared currency ahead of the ECB’s big interest rate decision on Thursday.

It seems rate hike prospects are still fueling euro bullishness because in spite of the debt issues surrounding Ireland, the euro continued to rise across the charts last Friday. It was simply RIDONCULOUS against the yen as it pushed EUR/JPY up 172 pips to 119.62. I know Cyclopip is going bonkers with how well his EUR/JPY trade is doing!

Euro zone data didn’t play a big role in euro trading last Friday. The only report released revealed that the unemployment rate in February was in line with expectations at 9.9%, and that January’s unemployment rate was revised up from 9.9% to 10.0%.

But enough about last week’s data! Let’s talk about what traders have been waiting weeks and weeks for!

No doubt, the highlight of the week is the ECB’s rate decision on Thursday at 11:45 am GMT. The markets seem almost convinced that we’ll see a rate hike from the central bank this time around, what with ECB President Jean-Claude Trichet speaking so hawkishly lately. So until then, it’s unlikely that the euro will see significant losses, especially since the markets seem to be so blinded by the prospect of a rate hike.

If you’re looking for action before that, you may get some from the euro zone retail salesreport due tomorrow (9:00 am GMT), German factory orders data due on Wednesday (10:00 am GMT), and German industrial production figures due on Thursday (10:00 am GMT). Just be sure to keep in mind that the ECB’s big rate hike is just around the corner when trading these reports!

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Without any major economic data on tap, action on EUR/USD was as tight as The Undertaker’s jumpsuit. The pair hovered around the week open price of 1.4229 for the most part of the day before closing lower at 1.4217. But it wasn’t all bad for the euro because it was still able to post a new one-year high at 1.4269!

As I said yesterday, the market’s attention remained focused on the ECB’s interest rate decision scheduled on Thursday. Perhaps talks about Jean-Claude Trichet announcing a 50 basis point-increase helped keep the euro chillin’ at its highs. I don’t wanna keep my hopes up for that big of a hike if I were you though. Remember that aside from inflation, the ECB also has to take into consideration the negative effects of the rate hike on growth.

Until Thursday, I think it’s best for us to keep tabs on the economic reports we have on tap from the euro zone to help us gauge the euro’s intraday moves.

Yesterday we only had the third-tier Sentix Investor Confidence report for April which showed that optimism waned down a bit. The index was lower at 14.2 than the 17.1 figure we saw for March, and it also fell short of the 16.1 consensus. Yikes! The disappointing might have just cost the euro a win against the dollar.

For today, we have a couple of reports on deck. The first one, due at 8:00 am GMT, is the final services PMI for March. Note that analysts aren’t expecting any revision to the previous reading of 56.9.

Then at 9:00 am GMT, we’ll get dibs on consumer spending with the retail sales report for February. The forecast is for a modest 0.1% uptick for the month to match January’s growth.

It seems to me that a rate hike from the ECB has already been priced in, which means that Trichet’s statement after he announces the decision may just make or break the euro’s rally. So make sure you don’t miss the reports, ayt? Worse-than-expected figures may just give the ECB’s head honcho enough reason to be more pessimistic.

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The big day for the euro is fast approaching! The ECB rate decision is due tomorrow and I’m sure plenty of traders out there are expecting to see a hike. In fact, euro bulls are so optimistic that they were able to push EUR/USD to close above 1.4200 even after it dipped to a low of 1.4151!

EUR/USD sank below the 1.4200 mark yesterday when Moody’s, a credit rating agency, announced that it downgraded Portugal’s debt rating… again! That’s the second downgrade it received in less than a month. The initial reaction to the downgrade may have been negative, but euro bulls got back on their feet in no time.

Expectations for a rate hike tomorrow are probably what’s keeping the euro afloat. A 0.25% rate increase is projected, and this would bring the benchmark rate from 1.00% to 1.25%. If the ECB does hike rates, it could push EUR/USD to break out of its current range and rally way past the 1.4200 area. On the other hand, if the central bank keeps their interest rate on hold, EUR/USD could slump back to the 1.04050 area. Make sure you stay tuned for the announcement at 11:45 am GMT tomorrow.

In the meantime, there are no economic reports on euro zone’s schedule for today but expectations for a rate hike could keep propping up the euro.

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Today’s a big day for the euro! The much-awaited ECB rate statement will take place today and we’ll finally see whether the central bank will hike rates or not. Expectations of a 0.25% rate increase have been pushing the euro higher against its major counterparts. EUR/USD reached a high of 1.4350 yesterday, while EUR/JPY closed at 122.45.

Euro bulls stayed on track yesterday even though Portugal officially gave in to a bailout. Prime Minister Socrates admitted that they are having a tough time assessing whether the Portuguese government needs help with its finances so they decided to take the safer route and ask the European Commission for assistance. This makes Portugal the third euro zone nation, after Greece and Ireland, to ask for a bailout.

Still, most traders seem to believe that this won’t stop the ECB from hiking rates in their policy statement today at 11:45 am GMT. Recall that ECB President Jean-Claude Trichet previously mentioned that an interest rate hike is necessary to cool inflation, but we still have to see whether the other central bank officials agree with him. Since several ECB officials already expressed their agreement with Trichet, a 0.25% rate hike is most likely priced in. But if we see a 0.50% rate increase, the euro could extend its rally. On the other hand, if the central bank refrains from hiking rates, the euro could drop it like it’s hot!

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Did y’all hear Trichet’s rate hike holler? Yup! The euro zone’s official cash rate is now up 25 basis points at 1.25%. Oh yeah! But now that the much anticipated announcement is over, will the euro show go on in the bull turf?

Based on the shared currency’s price action on the charts yesterday, it looks like the rate hike came as no surprise to the market. The euro lost 29 pips to the dollar as EUR/USD was only able to bounce back to 1.4303 after hitting rock-bottom at 1.4243. Meanwhile, EUR/JPY ended the day 97 pips lower at 121.47.

ECB President Jean-Claude Trichet’s slick words that gave no hint of further interest rate hikes might have weighed down on the euro. However, he did say the risks to the inflation outlook and its ill effects on the euro zone economy remain to the upside.

As for the economy, the central bank’s head honcho seemed worried. He thinks that there is positive momentum in the recovery but pressure from financial markets, rising prices, and weaker demand from Japan could take a toll on growth.

I wonder if today’s economic data from Germany will be able to push the euro to a fresh 1 year high against the dollar. At 6:00 am GMT, the country’s trade balance report for February will be released. It is anticipated to show that exports outpaced imports by 13.3 billion EUR which is slightly bigger than the 11.8 billion surplus we saw in January. Watch out for a better-than-expected figure as this will probably be bullish for the currency!

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Now that’s how you power through! The euro showed no signs of slowing down in the wake of the ECB’s big interest rate decision. Even with Portugal’s request for a bailout still fresh in the air, EUR/USD continued to march on, finishing the day 153 pips higher at 1.4456.

Since reports were light on the euro zone deck last Friday, traders had time to mull over what’s been happening in the big EZ. Apparently, investors don’t think its sovereign debt problems will spread to other countries. They also don’t seem to mind that ECB President Jean-Claude Trichet didn’t give any clues as to whether the ECB will by conducting a series of rate hikes over the coming year.

For now, the markets remain bullish for the euro. But be careful because we know exactly how fickle these markets are. Sentiment can change at the drop of a dime, and risk aversion could set in any time.

But enough of my sick rhymes! Let’s take a look at what lies ahead this week!

The action starts today at 6:45 am GMT with the French industrial production report, which is slated to show a soft 0.5% increase following January’s 1.0% rise.

Tomorrow, we have the German ZEW economic sentiment report coming out at 9:00 am GMT. Expect the index to step down from 14.1 to 12.2.

Then at 9:00 am GMT on Wednesday, we pick up with euro zone industrial production data, which is expected to show a 0.8% surge in production after January posted a 0.2% growth.

Capping our week off at 9:00 am GMT on Friday is the euro zone CPI. If you’re looking for a report to trade this week, this could be it! The ECB has said that it will be watching inflation closely, so expect the markets to react if last month’s CPI fails to match forecasts for a 2.6% rise in prices. Good luck, kids!

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Boo hoo, it was a losing day for the euro. EUR/USD barely made it to the 1.4500 level before it slid down and closed at 1.4428. EUR/JPY didn’t have such a good day either, as it fell to a low of 122.02 and ended at 122.10.

It seems that the focus is now shifting back to economic reports as the euro reacted negatively to the weak economic data released from France. French industrial production rose by a mere 0.4% in February, slower than the projected 0.5% rise. On top of that, the previous figure was revised downwards to show a 0.7% uptick, lower than the 1.0% increase reported earlier.

Today, the German ZEW economic sentiment index is on tap. The reading is expected to dip from 14.1 to 11.7 this month. The odds are tilted to the downside because of the negative impact of rising fuel costs and a stronger currency to the euro zone’s largest economy, but we’ll just have to wait and see whether sentiment can still remain strong and even beat expectations. If that happens, the euro could have a chance to bounce back from yesterday’s losses. Stay tuned for the ZEW report due 10:00 am GMT!

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The euro may have slipped at the start of the week, but it made up for it by racing up the charts yesterday! It shook off yesterday’s poor economic data as EUR/USD briefly rose above the 1.4500 handle and eventually settled at 1.4477 for a 49-pip gain.

While the German final CPI came in just as expected, showing a 0.5% growth, the ZEW economic sentiment surveys failed to meet expectations.

The German ZEW survey dropped from 14.1 to 7.6 for the month of April, while the euro zone-wide version fell from 31.0 to 19.7. Details of the reports revealed that although investors are feeling more comfortable about current market conditions, they see ominous clouds ahead because of rising prices, Portugal’s bailout, and the possibility of more ECB rate hikes.

Today we’ll continue with our euro zone assessment as French CPI (5:30 am GMT) and euro zone industrial production (9:00 am GMT) data are due. French CPI could show a nice rise from 0.5% to 0.6% while industrial production in the region is anticipated to increase its pace of growth from 0.2% to 0.8%. Expect euro bulls to continue charging through the charts if these reports print better-than-expected results!

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Just like Lady Gaga, the euro slipped and fell during its performance on the charts yesterday. EUR/USD tumbled from its intraday high of 1.4521 and closed the day 33 pips lower from its opening price. Ouch!

Too bad that unlike the pop superstar, the shared currency wasn’t able to recover its losses. Profit-taking outweighed speculations of further interest rate hikes that could’ve been sparked by yesterday’s inflation reports.

The French CPI for March printed higher at 0.8% than the 0.5% uptick we saw in February, and overshot the market consensus by 0.1%. Meanwhile, although wholesale prices in Germany came in just as expected at 1.3%, the uptick translated to a 10.9% surge on an annual basis. FYI, this is the fastest pace of increase seen in 29 years!

On the other hand, perhaps the industrial production report for February might have dragged the euro down. The actual value of output produced by the region’s overall industrial sector was only half of what analysts had predicted at 0.4%. Yikes!

We don’t have anything on tap for the euro on our economic calendar today, but you may want to keep an ear out for news about Italy and Iceland.

Why, you ask? Well, word on the street is that S&P threatened to downgrade Iceland’s credit rating and the Italian government downwardly revised its growth forecasts. Right, more pessimistic talks may just send the currency lower!

Iceland is not a member of the euro zone, but investors are worried that some banks from the region are holding some of its debt. As for Italy, its 2011 GDP is now expected to come in lower at 1.1% from 1.3%, while its 2012 GDP is seen to print at 1.3% which is 0.7% lower than it initially estimated.

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What a comeback! After dipping to a low of 1.4365, EUR/USD got back on its feet and closed 6 pips shy of the 1.4500 handle. Is it getting ready to make a new yearly high?

The ECB monthly bulletin released yesterday revealed that most central bank officials strongly support ECB President Jean-Claude Trichet’s decision to keep inflation subdued. In fact, a couple of ECB members even remarked that the ECB’s monetary policy stance is still accommodative and may need to be tightened again later on. Of course the euro jumped for joy after hearing that there are good prospects for another rate hike.

On top of that, U.S. dollar weakness contributed to EUR/USD’s rally after the U.S. reported weak PPI and jobless claims data.

Today, the euro zone is set to release its CPI report for March. Annual inflation is still expected to stay at 2.6% while core annual inflation could pick up pace from 1.0% to 1.1%. Better stay tuned for these reports due 10:00 am GMT because stronger than expected figures could give the ECB more reason to hike interest rates again. And we all know how interest expectations affected the euro lately, don’t we?

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Oooohhh baby, it’s getting interesting! Despite strong CPI figures, the euro found itself trading lower on Friday thanks to concerns about Greek debt. After testing the 1.4500 handle for the billionth time, EUR/USD slowly crawled down the charts to close at 1.4427 for a 67 pip loss on the day.

Euro zone CPI figures came in stronger than expected, printing a year-on-year figure of 2.7% after experts were expecting it to come in at 2.6%. This figure is way above the 2.0% target of the ECB, and will give them more reason to raise rates over the remaining part of the year.

However, this news wasn’t the only flavor of the day, as sovereign debt fears also had an impact on traders taste buds. Not only did Greek debt restructuring concerns still weigh on the markets, but Ireland also got hit with a downgrade from Moody’s. According to the ratings agency, there is some downside potential for weaker growth, while there are some concerns about whether Ireland can live up to its austerity plans.

Still, the fact that EUR/USD was able to close above 1.4400 is a sign that there is still some bullish sentiment for the euro. No reports are scheduled for release today, but watch out for PMI reports, trade balance data and the German Ifo report that are all coming out this week.

Depending on the results of these reports, it could be make or break time for the euro! I’ll be sure to update you guys everyday! Peace out homies and good luck trading this week!

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All together now, everybody say “risk aversion!” The euro experienced a hard fall in yesterday’s trading session due to a wide-reaching case of risk aversion on the news that Standard & Poor, a sovereign credit rating agency, had slashed the U.S. debt rating outlook to negative from stable. EUR/USD closed the day at 1.4232, almost 200 pips lower from its opening price.

According to Standard & Poor, the main reason behind the move was the division of the U.S. government on reducing the country’s debt burden. Remember, just last week, the government almost “shut down” because of the disagreement of the Republican and Democrats on how to handle the U.S. budget and debt.

Today, focus will turn to the euro zone PMIs and the current account balance that will both be released at 8:00 am GMT. The euro zone PMI is expected to print a reading of 57.2 for the manufacturing sector and 57.0 for services.

Meanwhile, the current account balance is predicted to show a 2.3 billion EUR deficit for February, a significant jump from 700 million EUR deficit seen the month before. If those reports come in below expectations, then we could see the euro experience another round of selling!