The EU equities markets have opened down following the Asian ones after weaker than expected trade Chinese trade surplus in July came at $25.1 Bln from 31.71 while the market was waiting for rising to 34.3 giving the greenback strength with a risk aversion sentiment putting more pressure on the single currency which failed this week to continue rising over 1.2442 following last week gains of US non-farm payrolls rising in July to 163k pushing up the market sentiment as the worries about the debt crisis outlook in the euro zone could emerge again with the mysterious Italian situation which does not give a clear idea about whether or not it will ask for bailing out plan like Spain which also has not given yet its request for having the first part which is Euro30 Bln of its Eur100 Bln rescue plan of its banking sector.

In the same time, the situation in Greece is looking also unclear as there is growing inside criticizing of the negative impact of the austerities measures on its depressed economy with creeping of the unemployment rate in Greece to a new high to 23.1% in May from 22.6% in April and also even from the outside as WSJ has referred also earlier this week to calls from US to light the current conditions on it while the European side decided this week to delay its approval of representing another Euro31 Bln of its second bailing out plan valued Eur173 Bln to be in October in stead of next month by God's will.

While the situation in US is still stable as the Fed is still adopting its wait and see stance waiting for further weaker economic signs to move again for lowering the credit conditions and this stance gives the greenback strength comparing to the single currency which is still looking ahead for further easing measures by the ECB which announced also this week its expectation of EU 2012 GDP to be down by 0.3% before growing be 0.6% in 2013 with declining of the inflation to be steady at 2.3% this year before falling below its target at 2% in 2013.

While it looks that The ECB is only waiting for working through the ESM as a way of injecting funds but it is still in need for more European working to come out and also it is still not unknown until now whether it will have banking license or not before taking new responsible action can be by LTRO3 or even giving a clear hint of new wave of buying bonds directly.

SO, it looks to the market currently that the Fed can have space of time while the ECB is always under pressure to take steps lowering the credit conditions in the face of the current weak economic activity and the debt crisis worries which are pushing the EU peripheral bonds yields up dampening the trust from another side.

The single currency after failing to get over 1.2442 versus the greenback falling again below 1.23 can meet now in the case of diving further supporting level at 1.2134 before 1.2042 which could stave off the pair falling last month and in the case of falling below it, this can open the way for testing 1.20 psychological level which can be followed by reaching 1.1876 again whereas the pair has rebounded forming its bottom on 7th of June 2010 while rising again can be faced by resistance now at 1.2442 and the breaking of it can be followed by psychological level at 1.25 before 1.2693 and 1.2748 which has been reached after the recent parliament elections in Greece in last June.

Kind Regards

FX Market Strategist

Walid Salah El Din

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