Air thin for EUR/USD at 1.36

Whether wishful thinking or tempting fate, the president of the European Council, Herman Van Rompuy, said today that ‘the existential problem of the euro is behind us’.

It would also seem that political heads are taking issues regarding Greece’s 2014 fiscal gap one year at a time, pushing any decisions on how to deal with the issues until next year. The Ecofin conference in Luxembourg is likely to touch on this, as well as continued questions on the potential banking union.

For now the euro seems to find the $1.36 level against the dollar a little overdone, and the pair has pushed below previous resistance of $1.3570 in early trade.

The release of Germany’s ZEW economic sentiment survey for October may be what is needed to push GBP/USD higher. Expectations are for a small decline from last month’s 49.6, to 49.2. Given how important the powerhouse of the eurozone is for growth expansion, we can expect to see a little volatility should this number fail to impress.

Later this afternoon we will get to see the New York manufacturing index. An improvement to 7.5 from last month’s 6.3 is expected, yet – in light of the current impasse in Washington – markets may have to prepare themselves for a miss.

Key support for the pair lies at $1.35, while above that the bias is for a stronger euro. Any drop below the $1.3450 level opens a path for a return to $1.3320.

Spot FX EUR/USD chart

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