EUR/USD found a modest bid tone in Asia overnight. After closing in NY at 1.3220, the pair fell as low as 1.3184 before putting in a recovery of sorts. There were numerous reasons put forward to substantiate the strength, the most obvious one being a strong move higher in EUR/GBP where stops were tripped above 0.8720 after the pair had closed in NY at0.8680.
This move was apparently started by macro funds in the wake of the Spanish ratings downgrade which leads to the common belief that a UKratings downgrade is not far off. The pair has since traded up to 0.8734 but has fallen back sharply as indicated by Sean in the previous post.
Other chatter around dealing rooms in Singapore suggests EUR/USD gained some support from short covering in the wake of the mooted (by German lawmaker) E100-120bln 3-year bail-out plan. All up though the negatives in terms of Greece just won’t go away and whilst we will see short-covering rallies fromtime to time, there seems little reason for the shorts to panic at this stage.
