FXstreet.com (Barcelona) -
… The (
Since the tops at 1.3172 posted in mid September, the euro has done
nothing but falling against the greenback to today's lows below the
key level at 1.2850
While Greece remains on the cards, Spain has taken over the main
role in the euro zone drama, and promises to ignite the fireworks
in the upcoming sessions. Protests jolting the country defying
another squeeze by the government's plans to meet budget conditions
are echoing in the domestic debt market, with yields in the
benchmark bonds dangerously approaching the critical threshold of
6.0%. All these events have derived in entrenched pessimism among
investors, queueing to unwind euro long positions.
… Could it be temporary?
Analysts are now debating whether this is a temporary correction,
clearing the way for further upside attempts in the near future, or
is effectively a change in the recent bull trend.
That said, market consensus places Spain as the main trigger of
future events, as J.Foley from Rabobank argues, "October promises
to be a testing month for Spain and in this environment we see risk
of pullbacks for EUR/USD towards the 1.2600 area". In the same
tone, K. Jones at Commerzbank suggests that the cross might be
marching south towards 1.2624 (2-month uptrend).
… Or the spark for a new bear trend?
All in all, it's being a forgettable week for the single currency
so far, and the heavy calendar tomorrow doesn't bode well for euro
bulls: import prices in Germany are forecasted to rise, while a
small increment in the unemployment change wouldn't affect the
jobless rate in the first EU economy. A set of confidence and
sentiment indicators in the bloc composite as well as in Italy and
Portugal would prepare the terrain for a key Italian 10-yr bond