EUR Trading Outlook
The Eurozone has decided to not only allow the rescue funds to recapitalize the Eurozone banks but all banks will be treated equally and there would be new banking supervision. The EUR/USD market is extremely short so this large move could catch the market wrong footed and a short squeeze up towards 1.2700 is very possible.
The Euro (EUR) the EUR/USD is pivoting around the 1.2500 in a holding pattern ahead of the major risk event of the week. Headlines will be coming out constantly and volatility is expected. EUR/GBP managed to reclaim 0.8000 overnight. During Asian trade today we saw the market break above 1.2510 and is so far well supported.
The Euro (EUR) the EUR/USD eased back below 1.2500 again overnight with the downgrade of Germany by Egan-Jones adding weight but support was seen by talk in the market that the ESM may drop its preferred creditor status in helping countries. Other comments ahead of tomorrow’s EU summit came from German’s Merkal once again lowering expectations stating Europe will not have shared liability as long as she lived.
The Euro (EUR) the EUR/USD grinded lower with after opening at 1.2550 to break below 1.2500 and find support at 1.2480. The EUR/JPY was a constant source of selling pressure falling from Y101 to below Y100 as the Safe haven roared back into favor. EUR/JPY eventually found support at Y99.2 and is retracing in Asian trade Tuesday so far but with the EU summit looming more selling on rallies is expected.
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