FXstreet's  Instablog

The euro advanced to a fresh 6-week high versus the dollar on Monday as financial markets begin the week in a constructive mood afterSpain formally requested a bailout to recapitalize banks and Greece launched a debt buyback.

However, market optimism was tempered by disappointing US manufacturing data. Even though US stocks opened higher, they gave up gains after a report showed US ISM manufacturing index fell into contractor territory.

For the week ahead there are several central bank monetary policy announcements and the US employment report, while investors will also be closely following the ongoing US budget talks.

Euro hits 6-week high, nears 1.3100

EUR/USD printed a 6-week high of 1.3074 during the New York session and was last up 0.5% at the 1.3065 zone. Technically speaking, the euro holds a short-term bullish bias, with 1.3080 level as the last hurdle on the way to 1.3100, with 1.3170 coming into view. On the other hand, the 1.3000/10 area should offer support.

"Fundamentally, there doesn't seem to be much that can hurt the EUR these days, with the single currency making marginal new highs overnight despite the EFSF/ESM rating downgrade after the close on Friday and not-so-great PMIs overnight", says the TD Securities team. "EUR/USD is now trading comfortably above 1.30, and continues to look positive from a short/medium/long term technical perspective".

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

FXstreet.com (Barcelona) - The Euro found some support in Asia from an FT story claiming that EU authorities are in talks over Spanish rescue plan. The news was an excuse relevant enough to fed risk seeking strategies ahead of Europe, with Asian equities ending higher, tracking the steadier bids in risky assets last NY trade.

After the throw of new liquidity commitments by central banks, the risk now is that the longer Spain decides to hold back from asking a bailout, the more anxious markets will grow, until the inevitable occurs, and 'Cervante's Land' gets the rescue. The question of "when" not "if" is a sure bet, but the immediate consequences are markets may be moving toward pricing out the OMT related gains until the Spanish government bites the bullet.

Spanish successful auction bad news for risk assets?

Yesterday, Spanish auction - a new 3-year BONO and a 10yr tap - was successively conducted, with bid-to-cover ratios and yields abating any anticipated fear. Spain has now completed 82% of its yearly planned issuance.

Risk, however, is that Spanish PM Rajoy, amid good results in auction and lower yields in long paper, will have some more days/weeks for maneuver until the market sends him down to earth, reminding him - through higher yields - delays are not welcomed when so much is priced in risky markets.

As Divyang Shah, Analyst at IFR Markets, notes: "A successful sale could prove to be bad news for risk markets if it reduces the pressure on PM Rajoy to act. The hope had been that with the ECB OMT carrot, Spain would be more willing to embrace a bailout and thus meet the conditionality needed to trigger outright bond buys."

EUR/USD on the bounce, what side regains 1.30 key

Odds are high for range trading tactics to dominate the price action in early Europe, amid an economic calendar looking quite bare. Fluctuations in price likely to be driven by intermittent stop hunting coupled with the never-far-prospect of spikes on a headline-by-headline basis, with sentiment shifts related to EZ/Spanish negotiation leaks, Troika headlines.

Currently, EUR/USD traders, as suggested in yesterday's Europe open report, appear to be entertained selling rallies into strength, making so far true two premises, one being buying multi-month highs offered poor risk reward ratios, and secondly, perhaps more compelling, as the daily makes lower lows, traders are pricing out the potential for further delays in the Spanish bailout request.

The technical picture in the most liquid pair in the FX market, as it stands ahead of the European open, still paints a grey landscape for buyers short term talking, with the spot rate testing offers ahead of 1.3000, area of strong dispute broken yesterday, now acting as resistance. The bounce in the EUR/USD, as Valeria Bednarik, Chief Analyst at FXstreet.com, notes, "remains so far limited" to get buyers much excited. Technical support at 1.2935 - intraday traffic lows - followed by 1.2915 are the obvious support levels to watch on the downside.

According to Fan Yang, Technical Strategist at FXTimes, "The question now is whether the pullback will break above 1.30. Around 1.30, there is also a declining trendline. Holding under1.30, and the declining trendline with the 1H RSI holding under 60 would all be signs that bears are still in charge after a pullback. In the bearish scenario, the next support pivots to look out for in the short-term are 1.2875, and 1.2815. A return above 1.30 and above the declining trendline would refocus the market to the upside even if we are in a medium term consolidation."

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

FXstreet.com (Córdoba) - The dollar is stronger versus most competitors on Thursday, with the main exception of the yen, as the safe-haven sell-off seems to have come to an end. Market sentiment deteriorated further today, weighed down by weaker-than-expected PMI for China and Europe.

European markets were broadly down, while Wall Street futures pointed to a lower opening as weak data underlined worries about global economic growth, leaving investors to await US data. The Philadelphia Fed gauge of regional manufacturing activity and weekly jobless claims figures are due later during the New York session.

Meanwhile, yields on Spanish debt in the secondary market are mixed after a well-received Spanish auction, but as BBH comments, "the correlation between peripheral yields and the euro is in flux this week".

EUR/USD eyeing 1.2900 support

The euro, which was trading heavily, though within last Friday's trading range, broke below 1.2950 during the European session and hit a 1-week low of 1.2930. From a technical view, "a break of the $1.2900-20 area would strengthen the idea that an important top is in place", says the BBH analyst team.

The rally of the EUR/USD stalled twice at the 1.3170 zone, as shown by 9/14 and 9/17 failed attempts to follow through that level.

In BBH view, the price action is broadly consistent with what we have seen following the announcement of QE2 back in Nov 2010, "where the dollar weakened initially and then recovered smartly".

Meanwhile, analysts remain split about the near-term fate of the shared currency, although there is growing consensus that EUR/USD has scope to extend recent gains. According to the UBS analyst team, the EUR/USD is still bullish. "The recent corrective pullback was expected and support at 1.2916 should hold in the short-term", they say. "Resistance is at 1.3085 ahead of 1.3172".

Sean Callow, analyst at Westpac notes that the "EUR/USD will be supported on dips en route towards 1.33-1.34 in October, while also being mindful of the Spanish bailout-wise situation and the talks between Greece and its lenders, which were deferred to next month on good prospects".

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.