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27 Mar 2013
Euro bears warming up
FXstreet.com (Barcelona) - The panorama is far too grim to allow even the smallest chance of things getting better around the single currency, at least in the very near term. The euro finally managed to break the recent dullness around 1.2850, as increasing pessimism, fragile sentiment and gloomy data from the euro area have combined to drag EUR/USD to fresh 2013 lows in sub 1.2800 levels, with promises of extending the current decline.
… All eyes on Cyprus tomorrow
When all was pointing at the cross to remain flat-lined in the mid 1.2800s until Cypriot banks re-open their doors tomorrow, it seems that market participants are not buying the ‘one-off’ case in Cyprus despite the paramount efforts of EU officials to amend/counteract the recent and unfortunate comments by Eurogroup Head, J.Djisselbloem. The damage to investors’ confidence would now require even more efforts to be restored, however that would surely take much longer.
Debt markets are already voicing their concerns, exposed in the wider CDS spreads between Germany, Spain and Italy. In addition, borrowing costs in the Italian bonds expiring in 2018 have printed higher yields, although the negative trend in the 10-year benchmark remained unchanged.
Furthermore, there won’t be any colours in the euro area in the medium term, as next week’s final PMI prints in both manufacturing and services sectors do not bode well for the bloc currency, nor does the still absence of (any intent) of government in Italy.
When comes to technicals, the cross is back navigating within the downtrend channel after a brief and unsuccessful attempt to break higher in the wake of Cyprus’s deal.
The 200-day moving average around 1.2880 is now history, and increasing selling interest is now opening the door for a retest of the area around 1.2660/85, where sit the November lows and the 61.8% Fibonacci retracement of the July’12 – February’13 upside. A deeper pullback would then expose 2012 lows in the vicinity of 1.2040
… All eyes on Cyprus tomorrow
When all was pointing at the cross to remain flat-lined in the mid 1.2800s until Cypriot banks re-open their doors tomorrow, it seems that market participants are not buying the ‘one-off’ case in Cyprus despite the paramount efforts of EU officials to amend/counteract the recent and unfortunate comments by Eurogroup Head, J.Djisselbloem. The damage to investors’ confidence would now require even more efforts to be restored, however that would surely take much longer.
Debt markets are already voicing their concerns, exposed in the wider CDS spreads between Germany, Spain and Italy. In addition, borrowing costs in the Italian bonds expiring in 2018 have printed higher yields, although the negative trend in the 10-year benchmark remained unchanged.
Furthermore, there won’t be any colours in the euro area in the medium term, as next week’s final PMI prints in both manufacturing and services sectors do not bode well for the bloc currency, nor does the still absence of (any intent) of government in Italy.
When comes to technicals, the cross is back navigating within the downtrend channel after a brief and unsuccessful attempt to break higher in the wake of Cyprus’s deal.
The 200-day moving average around 1.2880 is now history, and increasing selling interest is now opening the door for a retest of the area around 1.2660/85, where sit the November lows and the 61.8% Fibonacci retracement of the July’12 – February’13 upside. A deeper pullback would then expose 2012 lows in the vicinity of 1.2040