The Euro Finance Ministers agreed on terms of a bailout for Spain’s troubled banks with 30 billion euros ready by the end of the month, but the finalization of the deal will not take place until July 20. They also to ease deficit cutting deadlines, giving them until 2014 to achieve a deficit of 3%. Yields on Spanish debts fell 24 basis points. Italian 10 year yields fell 17. Spreads to German bonds narrowed as well.
This action has helped the EURUSD a touch although the reaction still is a bit limited. The high to low trading range of 54 pips remains anemic for the 2nd straight trading day. Yesteday, the pair could only muster 69 pips for the entire day. The longer a market non trends, the better the chance for a trend like move. So I will be looking for an extension of the range (low 1.2281, high 1.2335). The close from yesterday came in at 1.23109. The price is opening the NY session near this level.
From a technical perspective, on the downside, the week closed last week at 1.2281. This and the June 1 low at 1.2286 provide the support currently. Yesterday in the NY session, the price dipped to 1.2277 but quickly rebounded. A move below should solicit a downward momentum for the pair with the low for the week (and the year) at 1.22515, the next target. Other downside targets come in at 1.2195 which is the bottom trend line on the daily chart. The 1.2131 is the 50% of the EURUSD lifetime range. The last time the pair was at this level, the price found early support buyers against the level before breaking lower to the 2008 low of 1.1876.
On the topside today, there is topside trend line resistance at 1.2340 currently. The 38.2% of the move down from the Thursdayhigh plateau (at 1.25434) comes in at 1.23630. This also corresponds with the low area from Thursday/Friday. If prices move above this level, the 100 hour MA and the underside of the broken trend line at 1.2382 will be the next major target. The price has been below the 100 hour MA since July 4th (last Wednesday).
At 1.2307 currently, traders who are still short from last week’s trend move lower, have not felt much pressure this week. Those traders who are long, meanwhile, have not had much in the way of comfort. The burden remains on the longs or buyers to take control. Until they can win some of the small battles (like get above the 1.2340 and 1.2363), the shorts remain in the drivers seat.
