The Belgian government could fall over the failed takeover of Fortis by BNP-Paribas. This is potentially a bigger deal than your garden-variety change of government as the very existence of Belgium itself has been called into question in recent months over repeated difficulties in being able to form a government and ongoing tensions between the French and Dutch-speaking populations. It is a bit ironic that Brussels is the seat of government for Europe but Belgium is one of the more politically volatile countries in the EU at the moment.
EUR/USD has broken lower late in the European session. Continued profit-taking after a huge run up over the last two-weeks is to blame. We’ve broken decisevely below the 38.2% retracement of the 1.2650/1.4720 rally. 1.3840 and 1.3765 are support points on the way down. We trade now at 1.3870.
