Traders note very good supply in EUR/USD toward 1.3150 and above, some protecting (successfully, so far) expiring 1.2650/1.3150 DNTs (even though some are rolling off today, there are still plenty on the books, we hear.)
Looks to us as though some of the euros sold into strength this morning are being taken back on the dips at the moment in the 1.3060 area. 65 pips in a few hours in markets like these is nothing to sneeze at.
Keep an eye on Spanish yields. They are zooming this morning (+21 bp) as Spain seeks a guarantee of tight spreads (200 bp) over Germany from the ECB before applying for a bailout. The ECB is very unlikely to make so stark a commitment.
No guarantee, no bailout. No bailout, higher bond yields. Higher bond yields in the euro zone periphery, lower EUR/USD.
