After we have seen 1.60 taken, and now an orchestrated "Operation Uptick" it gets hairy for the EUR.
Some thoughts:
1) 1.60 was quickly sold, like the last time. So, some profit taking could bring fib retracements. We see just that. In the morning it pierced the latest downtrend on stops but was sold within minutes.
The rebound after yesterdays drop seemed to be fuelled by profit taking in the carry drop, US equities where large trading profits are quickly exchanged into Euros.
The base... 1.57625 is the next major support line. Two floors above: 1.5934, somewhat the shoulders of the very last spike
2) The spanish financial flu´ where the large constructor went bonkers (Martinsa). Showing additional signs of distress in Europe. But not in the "core" having little meaning for a then core Euro. And we knew about problems in spain; and see, even a lame UK economy did not stall the Pound which reclaimed $2.
I do expect more unpleasant news for the Euro Zone where the economic numbers continue to deteriorate. Only thing is, rate talk because of accelerating inflation numbers. Naturally, tough talk keeps the currency in uptick mode.
3) The operation uptick could have some second round effect on the dollar IF it is sustained. We dont know that yet. We dont know how many billions GS spent to uptick the market which inevitably come from the discount window.
4) 72 in the DX is maintained with all means, once more. The JPY just faded because of profit taking in the latest carry trade setback. Also Oil and some commodities are down, implying less forced buying on $ weakness.
Short term pain, long term gain?
Numbers are due in Europe in a few, construction perhaps underpinning the Martinsa misery or not. We will see in 45 Minutes.
I have taken a short position in the CHF. Also, ZEW Numbers for Switzerland are due at 11 and the UBS thingy is not confidence instilling. |
