Monday, July 23, 2012

Support and Resistance Levels for EUR/USD; Lower on Greek, Spanish Worries (Update)

Here's an update on the euro's longer-term channel. It looks like the next support level to crash through is 1.1875, which was the low on 6/11/2010. It might want to gravitate towards the lower bound of the descending channel as well, at some point. New resistance is 1.2288 (1.23). It is moving lower this morning on Greek bailout worries, as well as fears over the financial stability of Italy and Spain (watch an interview with IMF's José Viñals below). According to Gavan Nolan of Markit, Spanish 5Y CDS made a new record high (or wide) today at 635bps.

Deutsche-Welle and The Telegraph on Greek bailout worries:

"Greece's reform process is showing clear signs of lagging as the government requests more time to meet bailout conditions." (DW)

"The German news magazine Spiegel reports that the IMF has told the EU it will provide no additional funds for Greece." (DW)

"German economy minister Philipp Roesler on Sunday reiterated his doubts about whether debt-mired Greece would be able to stay in the eurozone, saying the "horror" of a potential exit had worn off, AFP reports" (Telegraph)

Bloomberg on the crisis in Spain:

"Spanish bonds slumped, with 10-year yields climbing to a euro-era high, after El Pais said six regions may ask the central government for financial assistance, increasing concern the nation will need additional aid." (SF Gate)

Here is Reuters (via FT) on the Federal Reserve's potential QE action that could affect the U.S. Dollar at their August 1 meeting. Sober Look also has an interesting post on this ('Investors betting on QE3 may find themselves in a crowded trade').

"An open-ended round of quantitative easing that could be adjusted to suit economic conditions should be considered if the Fed launches a fresh round of monetary stimulus, a top policy official in the Federal Reserve said in an interview with the Financial Times." (Reuters)

Economist Nouriel Roubini, in an interview with Reuters' Freeland File on July 17, warned that the "slow motion train wreck in the euro zone" could get worse in 2013 if Greece ended up leaving the euro zone. But more importantly, if Italy and Spain lost market access and ended up needing a bailout, which could ultimately fail.


Source: FreeStockCharts.com




More: Risks to Financial Stability Increase, Bold Action Needed (IMF Direct)

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