Headlines announcing what was known yesterday (ECB to lower standards on paper they accept as collateral), led to a Pavlovian dog reaction of buy the EURUSD. Now Spanish debt held by Spanish banks will be accepted at the ECB for funding because no one else will lend to Spanish banks. By the way, the Spanish banks are the buyers of the Spanish government debt because no one else will buy it. So I guess that means the ECB is buying the Spanish debt. Isn’t that QE?
Anyway, the price is back above the 1.2570 (38.2% of the June move higher) and will look toward the 38.2% of the swoon from yesterday’s high to the low reached today at the 1.25866.
