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FXstreet.com (Barcelona) - As the U.S. Q3 earnings season gets underway, a combatant U.S. Dollar is reigning the board this week, with the transition from past optimism to more cautious bets still the norm. The downgrade in global growth estimates by the IMF, worries over the Spanish bailout delay, uncertainty over the next Greek aid disbursement and low earnings expectations, despite upbeat numbers from Alcoa (NYSE:AA) at the last U.S. close bell, are all factors weighing on risk.

According to Mitul Kotecha, Founder at Econometer, "Spain remains the major focal point and in this regard there is no progress in the country moving forward with a bailout request much to the chagrin of peripheral debt markets and the EUR." Yesterday, Spain's finance minister signaled the country is not on the verge of an aid request, reinforcing the case for a heavy Euro.

On the Greek front, according to the WSJ, the Troika's review of Greece has been positive so far, suggesting that the next bailout tranche will be unlocked later this month or early next month. While a positive outcome from Greece is still requisite sinéquanone to avoid EZ tail risks, this alone will hardly satisfy current uncommitted EUR bulls.

Yesterday, in a symbolic example that show how easily the market can be vulnerable to announcements from Europe, misquotes over the 10-year Spanish benchmark cause panic in the EUR/USD, which was heavily sold at the London open following an error in Bund/Bono spread quotations at Bloomberg Terminals. As Kathy Lien, Founder at BK Asset Management, notes, "despite this was quickly corrected, it left a lasting impression on the EUR/USD", as the pair heads into Europe having broken 1.2850.

Range should still hold; but bears beware

EUR/USD continues to march to its own ranging drummers, with still no catalyst in sight that may anticipate a major breakout. As John Hardy, Head of FX Strategy at Saxo Bank, writes in a daily research note, "the technicals are inconclusive until we get a bigger move out of the range. Big banking institutions are still busy sending research notes to their big trading clients and the majority favour range trading for the EUR/USD.

As an example, Bank of America Merrill lynch still recommends to its clients a bullish bias between 1.2824/1.2749. The likes of UBS or Commerzbank, as shown in recent reports, are rather inconclusive at this stage.

However, judging by the latest price action this week, the price is already down over 180 pips, with the Euro averaging 80+pips of losses each trading day, statistics than can not be overlooked. What is more, yesterday's close marks the first time the price closed below a long-held ascending trendline coming from August 16 low.

From a broader perspective, according to Raghee Horner, chief currency analyst for IBFX, "the EUR/USD is maintaining its daily time frame uptrend and continues to trade above its 200DMA which is at 1.2807. After sliding through the 1.2900 major psychological level, the conversation should now turn to a potential transition in the pair's market trend to chop between the 200DMA support and the 1.3050 level."

In terms of any catalyst affecting the price for today, there are few data releases of interest of which the Fed's Beige Book will be the main highlight. In view of Adrian Foster, Head of Asian Market Research at Rabobank, "the market tone will continue to remain cautious but we don't expect a major relapse in risk appetite."

Source: EUR/USD: Sellers Rule Within Range; Is 1.28 The Next Destination?