The EUR/USD finished the day moderately higher, closing up 25 pips at $1.2905 ahead of what is sure to be a volatile session with Fed Chairman Bernanke set to testify in front of congress at 14:00GMT. Furthermore, we will also see the release of the most recent FOMC minutes at 18:00GMT.

According to Sean callow of Westpac,"The U.S. calendar is dominated by Fed chairman Bernanke's testimony on "The Economic Outlook" to the Joint Economic Committee of Congress (10am NY time). He will deliver a prepared text then take numerous questions from both friendly and hostile lawmakers. Volatility over the course of his appearance seems assured, as markets try to quickly decide whether Bernanke is trying to dampen talk of reducing QE some time soon, is affirming such a view or remaining non-committal. USD should gain in the latter two scenarios but we still expect the first outcome - Bernanke

The EUR/USD was able to claw back a small portion of its losses suffered last week, finishing the day up 64 pips at $1.2884. Economic news was light on the session with European markets closed and no releases out of the U.S. Market participants will be expecting volatility to really pick up later in the week when we see Fed Chairman Bernanke's testimony to Congress, the release of the most recent FOMC minutes, and a number of other regional Fed speakers on the wires. Given the recent market buzz of the prospects of Fed tapering QE, the next few days could help set a more established trend for the pair as we near month end.

According to Marc Chandler, Head Currency Strategist at BBH,

in the U.S., the FOMC minutes from the April 30/May 1 meeting will be released on Wednesday. Markets will be parsing them very thoroughly for any

It was a rough week for the EUR/USD, as continued speculation of the Fed tapering QE purchases and worries of economic growth in Europe continued to put pressure on the pair throughout the week. When all was said and done, the pair finished the week down 0.90% to close at $1.2838. Market participants will be focusing on a number reports this week including testimony from Fed Chairman Bernanke, as well as speeches by some regional Fed officials.

According to Greg Gibbs, FX Trading Strategist at RBS,

the market will be looking closely at the Fed commentary this week. Bernanke's testimony to Congress on Wednesday is the main focal point, but there are important speeches by doves Evans and Dudley before then. As key supporters of maintaining the current $85 billion pace of asset purchases, any shift in their tone will be seen as evidence that the consensus and Bernanke's

Another day and another monthly low in the EUR/USD. It wasn't a good day for EUR: The common currency hit its lowest level in over a month against the greenback, testing 1.2841 on the back of disappointing GDP readings in France, Germany, and the EU itself. In the middle of the session, worse-than-expected economic data in the U.S. provided some respite to the pair. However, the dollar continues to build a bullish trend and, consequently, the EUR/USD reached fresh lows.

The pair closed 0.30% negative on the day at 1.2880, and short-term perspective is slightly bearish according to the FXstreet.com trend index on the one-hour chart. CCI indicators are bullish, while the momentum is bearish and MACD is neutral. "In the four-hour chart, technical readings maintain a strong bearish momentum, supporting the shorter-term view," FXstreet.com's analyst Valeria Bednarik commented, "with [the] market now eyeing 1.2744, this year['s] low."

By Karl Smith

"Quod Me Nutrit Me Destruit"

It's hackneyed in the U.S. blogosphere to say that the euro or, at minimum, the European Central Bank has been a disaster. The two are responsible for the most devastating economic crisis to afflict the Western World since the Great Depression. And at the rate things are progressing, the devastation in Southern Europe will soon clearly surpass the Great Depression.

It's perhaps surprising then that Pew finds the majority of Europeans in all countries surveyed to be in favor of keeping the euro.

This should not surprise us. Money -- whether its form is gold, sea shells, dollars, or euros -- has potentially devastating effects precisely because folks are reluctant to give it up. For each individual abandoning a currency means abandoning everything that he or she has built with that currency. The savings of the people of Europe are

By Anthony Harrington

There is a grim inevitability about the way in which analysts pour over every utterance from senior figures at the European Central Bank, weighing every phrase for its dovish or its hawkish qualities. At the time of writing, more than a week has passed since the ECB decided to try to stimulate the flagging EU economy by cutting its main refinancing rate to a record low of 0.5%. Banks and analysts had been on tender hooks wondering which way the ECB will go. Even had the ECB done nothing and left rates unchanged the story would not have ended there. Analysts and the media scrutinize ECB decisions intensively, looking for clues as to whether the ECB is leaning more towards a dovish than a hawkish posture, and vice versa. Following the rate cut, and partially due to better-than-expected US non-farm payroll figures, the dollar

Lars Seier Christensen, the co-chief executive of Saxo Bank, thinks it's only a matter of time before the euro passes into history as another failed experiment in the dark art of monetary machinations."It is the renewed reality for traders and investors," he advised at a Bloomberg conference last week in London. "The euro is a doomed currency and a lot of people knew that already when it was introduced. Rationality needs to return to the Eurozone. If it doesn't, recession will turn into depression."

If recent history is a guide, the best you can say about rationality's homecoming is that it's a work in progress. Granted, predictions of the euro's demise have been popular and premature… so far. Thanks mostly to the European Central Bank, the currency endures. Despite repeated events that brought the euro to the brink, Europe's great experiment in monetary unification limps on. It's conceivable that

For a second day in a row, encouraging German data gave support to the common currency, helping EUR advance across the board. But with not much follow through over the American afternoon, it is more and more clear that investors enthusiasm is waning as the days go by. Overall, the neutral stance persists, particularly in the EUR/USD, as UBS strategists Gareth Berry and Geoffrey Yu noticed in their early report:

In particular, the EUR/USD maintains a neutral outlook - initial support is at $1.3033, a break below this would expose $1.2995 and then $1.2936. Resistance is at $1.3159 ahead of $1.3243.

Early news that the ECB was discussing asset-backed securities buying gave the pair a lift up to $1.3194, as the Central Bank continues working on giving the economy a boost. However and as usual for the EU, the idea won't become a fact in the short term, triggering

After everything, the single currency closed flat on the day at 1.3075 against the dollar. No matter that the EUR/USD has risen to 1.3100 or has declined fast to 1.3070, the pair remained unchanged on Tuesday. So, what's moving the euro?

FXstreet.com analyst Valeria Bednarik commented in a recent report that "everything moves, except the EUR/USD." Meanwhile, BK Asset Management's Managing Director Kathy Lien stated that "investors do not want to see EUR below 1.30."

While the EUR/USD is staying anchored to its range between 1.3000 and 1.3200, "the 1.3040/1.3150 remains well-covered by orders at the extremes, and playing in between is the name of the game," as pointed out by Bednarik. "On a wider outlook, however, the pair needs to break either above 1.3225 or below 1.2970, both Fibonacci levels, on a daily basis to set a clearer tone ahead."

In the medium term, the pair is

The EUR/USD closed the day down 41 pips at $1.3072. The pair is still searching for direction, and given that the upcoming week is much more quiet as far as economic releases are concerned, the trading range nature of the pair could continue. There were a couple of economic reports released during the previous European session worth mentioning. These include Retail Sales, which came in at -2.4% actual vs. -1.9% estimate, and number of Market Services PMI figures.

According to Marc Chandler, Head of Currency Strategy at BBH,

The EUR service PMI came in at 47.0, it was an improvement over the 46.6 flash reading, but remains well below the 50 boom/bust level and is still consistent with continued contraction in Q2. German and French reports improved from the flash readings and Italy surprised on the upside (47.0 from 45.5).

Economic data in the coming European session will mainly be

After what was an extremely busy week of economic releases and central bank monetary policy meetings, the EUR/USD finished the week up 87 pips at $1.3116. The price action remains extremely choppy, with neither side being able to sustain any follow through for a substantial amount of time. Many analysts are now wondering whether or not the "risk on" mentality which was boosted by the better-than-expected U.S. jobs data will have any follow through going into the upcoming week and how will it influence the foreign exchange market.

According to Kathy Lien of BK Asset Management,

Investors put on their rose colored glasses today and drove currencies and equities sharply higher on the back of stronger job growth in the month of April. At a time when other central banks like the ECB and BoJ are kick starting a new round of easing, the better-than-expected labor market report will

FXstreet.com (San Francisco) - The EUR/USD collapsed on Thursday after ECB's movements on rate cuts and the 'open mind' about the negative deposit rates. Mario Draghi opened the door to further cuts and said the bank is 'technically ready' in case the eurozone conditions worsen. The EUR/USD recorded its first negative day in the last five sessions with 0.86% daily losses from opening price to the current 1.3065.

After falling around 180 pips from Thursday highs at 1.3217 to break down the 200 days MA at 1.3070, the EUR/USD found support at the lowest level since April 29 at 1.3035. then the pair traded sideways between 1.3055 and the mentioned 1.3070. Currently the pair is still slightly bullish according to the FXstreet.com trend index, Indicators such as The MACD, CCI and Momentum are pointing to the north while the Stochastic is neutral in the 1-day chart.

The ECB cut

The EUR/USD traded sharply higher Monday, closing up 63 pips to finish the day at $1.3092. The upcoming European session will be busy with German Retail Sales, German Unemployment, and Spanish GDP, to name a few. The real volatility will most likely pick up later in the week, when both the ECB and Federal Reserve will be holding monetary policy meetings. Finally, we will get Non Farm Payrolls to round out the week in the U.S.

Many analysts seem to be searching for answers as to the recent strength in the EUR/USD, even after economic data continues to disappoint out of the eurozone. Last week it was a number of reports which caught market participants' attention, with particular focus being on the German PMI/IFO numbers both missing estimates.

According to Kathy Lien of BK Asset Management,

The euro refuses to fall despite growing evidence that the eurozone economy is

Spain's economic problems now form part of such a complex web of cause and effect, action and reaction, that it is getting increasingly difficult for laymen, journalists and politicians alike to get to the core of what is actually happening.

"To a herd of rams, the ram the herdsman drives each evening into a special enclosure to feed and that becomes twice as fat as the others must seem to be a genius. And it must appear an astonishing conjunction of genius with a whole series of extraordinary chances that this ram, who instead of getting into the general fold every evening goes into a special enclosure where there are oats- that this very ram, swelling with fat, is killed for meat". – Tolstoy, 'War and Peace'.

After so many false dawns, the recent announcement by Spain's Prime Minister Mariano Rajoy that the government was revising down

EUR/USD has started the week off on a strong note, benefiting from the headlines that Enrico Letta has been elected as the new Italian Prime Minister. At one point earlier in the session, the pair had traded as high as $1.3068, but is now back to consolidating near the opening print of $1.3050.

According to our analysts:

After two months of an irreconcilable political deadlock, Enrico Letta, 46, and member of the centre-left Democratic Party (PD), was sworn in as new Italian Prime Minister on Sunday. Letta, who has managed to pull together a 21-member Cabinet, while becoming the third youngest Prime Minister since World War II, nominated an unprecedented seven women to his Cabinet. Fabrizio Saccomanni was appointed finance minister, taking on the responsibility to overlook and bring forward much needed economic reforms to the economy.

The main event later this week will be the upcoming ECB Monetary

Years ago a veteran trader, well into his eighth decade, gave me an order to buy 100 contracts of Kansas City wheat. Though grateful for the order, I wanted to make sure this old boy was still lucid because the wheat market had been going nowhere. So I asked him to confirm the order and tell me his reasoning. He replied, "Ralph, sometimes when a market cannot go down, it goes up." He had to hold the trade several months, but he ended up with a big winning trade.

Watching the recent euro trade has prompted me to recall old Eddie Byers' advise. Tuesday the German Manufacturing PMI was released, a bearish 47.9, well less than the expected 49. The German Services PMI at 49.2 was also well short of expectations at 49.2 instead of the anticipated 51.

Recently the euro had been visiting the 1.30 handle, where it would

After holding the $1.3000 support pivot numerous times over the past two weeks, the pivot finally gave way as weak German PMI data (47.9 actual vs. 49.1 estimates) fueled more talk of possible ECB rate cuts in the coming months. Although the pair did close below the $1.3000 level, some analysts found the lack of follow through to the downside impressive and believe the key will be to see how it reacts to data in coming sessions. The main report due out Wednesday will be the German IFO, which is released at 8:00 GMT.

According to Kathy Lien of BK Asset Management, "Traders reacted very negatively to the PMI report, taking the EUR/USD from $1.3060 to $1.2975 in approximately 30 minutes. But since then, it has failed to extend its losses. This may have to do with the steady eurozone PMI composite index and the rise in U.S. and

It's been a frustrating last few weeks for market participants trading the EUR/USD as the pair has basically tracked sideways since April 9th. Although it is holding up better than some of the other currencies such as the Aussie and Canadian, the coming session could provide bears with plenty of excuses to take the pair below the $1.3000 support level.

According to Kathy Lien of BK Asset Management:

For EUR/USD, traders are itching for a reason to take the currency pair below $1.30 and for USD/JPY some traders are wondering whether $1.00 is an impenetrable barrier. For more on USD/JPY you can read the yen portion of our commentary, but overall we continue to think that it is only a matter of time before this resistance level is broken. As for the euro, a break of $1.30 hinges upon tomorrow's eurozone PMI numbers.

She went on to comment:

As

After closing at its highest level since late February the previous day, EUR/USD was unable to achieve any follow through and finished the New York session down 1.08% at $1.3035.

The theme throughout the day across global markets was "risk off", as the U.S. dollar Index once again regained its safe haven status closing sharply higher at 82.73. Economic data released during the U.S. session was not much of a factor, with the majority of EUR/USD losses incurring before the Beige Book release late in the New York session.

"The worst performing currency today was the euro, which dropped more than 1% against the U.S. dollar. No major economic reports were released but the combination of dovish comments from an ECB official and a more positive Federal Reserve Beige Book report was enough to drive the currency pair sharply lower" noted Kathy Lien of BK Asset Management.

Lien then

The euro performed its second negative day of the latest nine sessions as the EUR/USD declined from low $1.31 levels to test intra-day minimum at $1.3020. The pair closed the day at $1.3040. The euro was hurt by the risk aversion environment as investors were concerned on China growth fears and the sad developments in Boston.

As Valeria Bednarik, FXstreet.com chief analyst, reported, "the day started with oil and gold falling hard on Chinese disappointing GBP." Gold plunged around 8% to a two-year low at $1355/oz, the biggest single-day sell off since 1983. Risk aversion accelerated late in the U.S. session, when at least three bombs exploded in Boston in what's suspected to be a terrorist attack.

The shared currency remained trapped within the $1.30-$1.31 range at the beginning of the week. In the words of the TD Securities analyst team, the EUR/USD has been consolidating in the "mid