EUR/USD Forex Commentary – December 13, 2011
Hi all. The euro acted as expected yesterday. I did have my timing a bit off and was stopped out +20 pips on my short but no biggie its still a good day.
Considering we had the typical plethora of tape bombs yesterday its no surprise the Euro tanked another 180 pips. Where do I start? How about Greece. The Greeks are having more trouble getting private investors to take the hair cut. What gets me about this is these investors cant see the forest through the trees. Either they take the haircut or they risk getting absolutely zero back on their investment and I have seen many economists say that the full write down from all private investors is the only way to make Greece solvent. At this point in time if I held Greek bonds I would be thinking lets get while the getting is good.
Then there was talk of the Irish playing the referendum card like Italy did which cost Italian Prime Minister Burscaloni his job. The Irish want a better deal on their bail out and who could blame them when is was German Chancellor Merkel that was a catalyst in driving Irish bond yields above the dreaded 7% forcing the bail out situation. Where was the ECB then? I ask myself. Just ponder that for a moment. What if the ECB protected Irish yields like they have Spain and Italy? Would this situation be this bad? True it was only a matter of time before the house of cards would crumble but buying time to shore up the foundation and actually getting the work done would seem to me to be an obvious path. I guess that’s just my lets do this right the first time attitude.
Last but definitely not least or the even the last of the bad news for Europe. There were a couple of stories from the FT and WSJ that the legal issues on the terms of the treaty changes hammered out last Friday seem to be just getting worse as many countries warn of issues with getting the deal past their parliaments. This just keeps getting better and better don’t it? (joke)
As for the charts we are in between some important levels on the daily and even though the resistance line above at 1.3073 is a broken support it may well find resistance there in today’s environment. I have doubts that a retrace to the 1.3173 level is in the cards but is possible.