Last time the euro was in crisis mode, back in the beginning of October, we had a broad-based slide in stocks, commodities and emerging markets.
This time around, the pressure is much more Europe-specific. Oil prices are up 25% from the lows from October, the CRB is 10% above its lows, US equities are in the upper end of recent ranges and the Bovespa (Brazil’s stock index), my proxy for interest in emerging markets, is up 15%.
Bottom-line: For EUR/USD to break significantly lower, we need the global “fear-factor” to rise. Higher oil prices are prompting Mid East reserve managers to resume diversification in a big way while European banks continue to shed assets and bring money home. Both those forces are helping cushion any blow to EUR/USD and is frustrating the bears in a very big way.
EUR/USD is firming, now at 1.3553. Resistance lies at 1.3575/80; Stops lie in the 1.3585 area.
