EUR Trading Outlook
The Euro (EUR) the EUR/USD rallied into Europe as the positive momentum from the FOMC Dollar weakness had another leg to run. The market then fell back to lower 1.3200 region a more familiar level and we were very contained until Spain was downgraded late in the US session by S&P. This is not the first downgrade we have seen in previous months so the downside might be limited with the EUR/USD already back above 1.3200 in the Asian session. The real test will be the European Bond Traders reaction to the downgrade in the European session later today. A move of Spanish long term bonds back above 6% could prompt fresh risk aversion selling.
The Euro (EUR) the Euro is once again back above 1.3200 and is looking to test recent resistance near 1.3250 as stock markets rally and the fear over Eurozone debt markets resides for now. The market is looking to ECB President Draghi’s speech tonight to contrast the European central bank’s outlook with the those of the US.
The Euro (EUR) French election concerns added to the fresh Dutch AAA ratings risks causing the Friday Rally to reverse to 1.3130. The EUR/GBP fell to new lows near 0.8150. The EUR/JPY fell back aggressively from Y108 and found support at Y106.50. The outlook is mixed with the bounce off 1.3000 failing to get far and Spanish/Italian bonds still remaining under pressure.
The Euro (EUR) the EUR/USD broke above 1.3150 and we moved to 1.3220 as the IMF news combined with the better than expected German IFO to push higher. April German IFO increased to 109.9 vs. 109.5 forecast. EUR/JPY kicked to Y108 and is enjoying the upside in recent days.
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