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EUR/USD Below 1.3800 on Positive Bail-Out Expectations and Neutral ECB Decision

October 2, 2008 by

EUR/USD broke down below the 1.3800 support level today as the dollar was fundamentally more attractive than the euro. Traders expect that the $700 billion bail-out plan will be adopted in the House of Representatives soon after passing Senate yesterday. Meanwhile, European Central Bank left the interest rate unchanged at 4.25%, which spurred talks that the rate may be lowered at the next governing council meeting. Macroeconomic statistics which came out today in U.S. wasn’t very positive for the dollar, but didn’t help the euro much. EUR/USD is currently trading near 1.3804.

Initial jobless claims rose by 1k last week compared to the week before — from 496k (revised up from 493k) to 497k. Traders were expecting a decline to 475k.

Factory orders in U.S. were down by 4.0% in August following 0.7% growth in July. Analysts expected that the factory orders will drop by 3.0% in August.

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