EUR/USD below 1.2600 now. It's possible that it could go below 1.2500 by the end of the week. So does that mean we can look forward to a new multi-trillion EUR bailout package this weekend?
Hmmm I can see Dr Evil now "1 Trillion dollars" What are they gonna do if it breaks 1.25, a 100 trillion dollar package? http://www.youtube.com/watch?v=jTmXHvGZiSY
http://www.zerohedge.com/article/kicking-dying-dog-goldmans-eur-update The Euro trades like a sick dog; albeit one that has a lingering illness rather than one that has just been hit by a truck . The package announcement squeezed many of the shorts out of the market and briefly saw us trade to 1.3095 but whilst peripheral spread markets have benefited considerably the currency is back at pre package levels. The reason for the sell off is debatable ; some suggest it reflects a belief that the european risk has just been transferred from the periphery to the core while others opine it is the currency unhealthy mix of tight fiscal policy and implied loose monetary policy. The options market seems to be factoring in less of a bias to the downside and anticipating a slow grinding move lower with less risk of an aggressive collapse; which seems reasonable . I find my conviction considerably lower post package but based on the price action , reduced positioning and policy mix I still feel a bit more comfortable playing from the short side . We are trying to trade opportunistically around a short position and would look to add again on rallies to 1.2740/50 . A move back above 1.2850 would warn that perhaps the market has underestimated the change in landscape and would make me think again . To the downside first support is at the asian low of 1.2605 followed by the years low of 1.2510 and then the 2009 and autumn 2008 lows of 1.2457 and 1.2339 respectively. ********* 2009 (March) low: 1.2457 2008 (October) low: 1.2339
below 1.2339: done As I posted on a different thread, EUR/USD is down by more than 7 cents from the peak on Monday 10 May at about 1.3097, so there is some potential for a bounce to 1.2520 and 1.2740. But I'd be surprised to see it go above 1.3097.