View: EUR/USD1.1877 the key draw, discipline is to keep selling rallies
Euro price action has been a little flat over the past few days, failing to find momentum following the breach of the 1.2288 support level last week which marked the low point of early June. This has been despite generally negative news flow out of the region too, specifically the issues surrounding the Spanish bank bailout which is covered off rather well here (http://bit.ly/Ngd8Zq) and new round of self-defeating austerity announced by PM Rajoy this morning. This looks a little unusual in our eyes given that these developments create more questions than answers in terms of the banking bailout and further budget cuts/tax increase are likely to only deepen the Spanish recession and we know where that spiral goes. Furthermore there remain doubts about the ESM, currently caught up in the German Constitutional Court among other places, and the ECB’s tone continues to be standoffish, suggesting the crisis will continue to run with obviously negative implications for the EUR.
Full report below…
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