“Oversold” and “EUR/USD” have not appeared in the same sentence for quite some time but that is the situation New York finds itself in early on Tuesday morning. Ambrose Evans-Pritchard once again sets the agenda with his piece in today’s Telegraph highlighting the mountain of toxic assets on the books of European banks which the market has all but ignored. The German “bad-bank” scheme perpetuates “zombie banks”, a problem that plagued Japan during its lost decade.
1.3900 is solid resistance on rebounds in EUR/USD with more at 1.3930, the 38.2% retracement of the 1.4051/1.3856 decline. 1.3840/50 is solid support.
