A report that German lender Commerzbank will have to come up with EUR 10 bln in capital this year is helping cool the euro rally. So far the US government has been able to backstop the US banking system but there are fears that the big European banks are too big to save given their size relative to the size of the economies in which they are domiciled and their hugely leveraged balance sheets. European banks could be the next shoe to drop.
UPDATE: No sooner said than done. The German government just stepped up and took a 25% stake in Commerz. Bye-bye bonuses.
EUR/USD is consolidating at 1.3725. Support is down at 1.3665.
