The European rally in EUR/USD has taken the immediate downside pressure off the pair but the failure to hold above what had been a pivotal area at 1.2145 now leaves the technicals in a muddle.
Those who believe the trend is your friend should take advantage of rallies toward downtrend resistance in the 1.2215 area to set fresh shorts.
Those who believe granting the ESM a banking license is a panacea for the euro zone’s woes are smoking something. You can’t solve a debt crisis with more debt. Period. Like most steps in the euro zone, we rally on hope for short-term fixes before coming back to the grinding reality that there is no easy way out of what ails Europe.
