EUR/USD has fallen..

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EUR/USD has fallen over 250 points from its weekly high on Tuesday to its lowest level for 16 months. Although we expected the Euro to weaken over the coming months, the speed at which it has fallen to these levels is rather surprising. The pressure will be on Angela Merkel and Nicolas Sarkozy to provide some relief for the Euro with some positive news from their meeting next Monday in Berlin. They will try to lay the groundwork for a new EU summit with the emphasis on Germany to help its partners fiscally through the coming years. Yesterday France auctioned off bonds hoping to raise 8 billion Euros and there was solid demand with the sale coming in close to their target figure at 7.96 billion Euros, however the threat of a potential downgrade to their AAA rating still hangs over their economy. Italy and Spain are due for another round of bond selling next week as they look to raise capital for loan repayments and bond redemptions due in the next few months.

The big figure out today is first Non-Farm payroll number of the year out of the US at 13.30. Consensus is for a higher figure then last month and if the expectation is met this will continue the sequence of a good set of figures for the US especially concerning their employment numbers. Expect volatility around the time of the figure and if you need to secure a rate today it may be worth doing this before 13.00. We have had a set of mixed figures out of the Eurozone this morning with economic and consumer confidence slightly higher but retail sales both YOY and MOM lower at -2.5% and -0.8% respectively. German factory orders are due out at 11.00 and any negative number could show a possible slowdown in German manufacturing.

We expect the rates to stay fairly stable today with any volatility likely to occur around the Non-Farm payroll figure. We could see the Euro regain some this weeks losses towards the end of the day as traders look to take profit from their positions. That being the case it may be a good idea to take advantage of these levels if you are a Euro buyer as there will be volatility around the outcome of the Merkel – Sarkozy meeting next Monday.

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