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Forex pairs in this Article » EUR/USD
FXstreet.com (Barcelona) - The EURUSD still remains trapped in very familiar levels, today opening back below 1.30 but mostly unchanged if seen from a 2-week step back. The recent moves in the spot rate only helps to strengthen the current mixed bag conditions, with moves driven by flows in Euro crosses, especially vs Yen. Scarcity of major developments on the EZ-debt related front, combined with thin trading conditions, anticipates further range-plays ahead.

Unresolved concerns around Spain and Greece are still 'key-holders' to open the doors to next big levels in the pair, with headlines in between providing the typical daily noise/stop-loss orders hunting. In the very short-term, however, Euro still faces cloudy prospects as it needs to find new catalyst to rise, with neither Spain nor Greece likely to provide them this week.

On one hand, Spain is nowhere near to announce aid petition to EZ authorities, at least until Oct 21 regional elections in Galicia are over. On the other hand, the Greeks are still trying to figure out further 'Troika-friendly' cuts in the next 10-days before a decision is made on whether or not to conceive the next aid tranche disbursement (EUR35bn) ahead of the Oct 18 EU summit. Furthermore, Cyprus downgraded by Moody's or IMF cutting global GDPs is not helping the risk recovery either.

So, where are the drivers for the next short term moves?

Today, German Chancellor Angela Merkel is visiting Greece, which will mark her very first visit to the country since the sovereign debt crisis saga started. She will meet PM Antonis Samaras at 1.30 p.m. local time, followed by President Karolos Papoulias at 4.45 p.m. No compromises are expected other than a friendship visit.

According to Slavena Nazarova, Economis at Credit Agricole, "any sort of flexibility from Germany, regarding either the disbursement of the next tranche or any delay in the fiscal targets (Samaras wants 2-years' extension to fiscal rules) is highly unlikely before the release of the next Troika report."

Draghi is also due to speak after a European Parliament committee meeting today and headlines on the OMT and Spain's bailout amongst many other topics, will likely be covered. Will he deliver some good news on ECB liquidity, Westpac Analyst Sean Callow rhetorically questions... The EcoFin meeting in Luxembourg will continue today, and many topics will be covered.

Mr. Callow notes: "Markets look as if they are tiring of the current stand off between Spain and Europe on the details of bailouts etc. The longer this goes on, the further away ECB OMT liquidity looks to be. This may start to drag more on equity/ commodity markets in the sessions ahead."

Since markets are still governed by a general sense of risk aversion, this week's US earnings, as Kathy Lien, Founder at BKAssetManagement, notes "could set off a reversal in U.S. stocks and push the U.S. dollar and Japanese Yen higher." In this market environment, "risk on / risk off is still the biggest driver of demand for dollars" she says.

EURUSD, moves in either way range-bound in nature

Technically, EURUSD has a very solidtechnicalresistance at 1.3085, neckline for a possible double-top formation, and level proved to be too high to retest so far. Overall, the spot rate is far from threatening the any major technical break. On the downside, As FXWW Founder Sean Lee informs, "large buying interest from reserve and asset managers has moved up and is starting at 1.2915." He predicts we are in "for an extended period of ever tightening range-trading."

Technical expert Ms. Vednarik confirms Sean stance, noting although the technical stance is mostly neutral, tipping short term support at 1.2930 - an ascending trendline crosses around this level too - ahead of stronger 1.2880 - sequence of multi-lows from last week.
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