By FX Empire.com

The EUR/USD started a week with a lot of developments yet failed to escape the downside pressure and ongoing fear that kept the dollar favored on its haven appeal.

The euro lost grounds even as we expected the new government in Spain to give the euro some support. The People’s Party won outright majority in the general elections and the new leadership that will take charge to the end of next month already promised more austerity and spending cuts to ensure fiscal health yet also promised to revive growth, something that should be positive to the market yet the ongoing pressures prevented that reaction.

Moody’s warned France of the worsening outlook and that it could lose its AAA rating, Hungary reflected southern European pain and applied for IMF aid and all ensured the spreading contagion. The US suppercommittee also failed to reach agreement on the debt cuts which all ended in a toxic effect on the sentiment and fueled risk aversion.

Tuesday will see further volatility and choppy trading and we still hope for some relief from Europe which all depends on the outcome of the late meetings in Brussels as both Mario and Papademos independently head to meet EU officials to outline the new plans which we hope might offer any details the might calm investors and ease surging yields.

Spain also is scheduled to auction 3-month and 6-month bills which investors will track for the yields and will be cautious of any ECB action which as we saw last week kept supporting relief spikes from time to time. In terms of data there is nothing major from the euro area as the eyes will be on the US GDP which will further increase the volatility.

The euro zone will start the session at 15:00 GMT with the consumer confidence indicator for November in the advanced reading, where the indicator stood at -19.9 in the previous month.

At 13:30 GMT the United States will join the session with the GDP figures for the third quarter in a second reading, where the quarterly annualized GDP index could have lingered at 2.5%, while the personal consumption index could have stood at 2.4%, in the time GDP price index is expected unchanged at 2.5%. Finally, the quarterly core PCE is projected steady at 2.1%.

At 19:00 GMT the Federal Reserve will release the Minutes of FOMC last meeting.

Originally posted here