EUR/USD’s decline was much less fierce than the blow-out in spreads this morning, so I guess it is logical that the single currency would not benefit from the rapid compression in rates seen in the last few hours. Greek 2-year bonds are now yielding under 17% after rising well above 20% earlier in the day. Looks like traders are taking to heart talk of a three-year bailout which will lower the default risk dramatically.
Equities are losing their early pop and commodities are back in the red, so despite the moderate improved debt backdrop (relatively speaking) pressure on the currency remains.
Traders report stops on intraday longs i EUR/USD in the 1.3165 area. We trade now at 1.3185.
Looks to me like 1.3265/70 is shaping up as decent resistance while 1.3140/45 is the new downside line in the sand.
