Good morning everyone.
Today we may get a glimpse into what Spanish PM Rajoy has in store for his people and pretty much the rest of Europe. Today we get the budget. It has been mentioned many times in the media that there were back room discussions between the Spanish government and the EuroGroup over fiscal reform in Spain and that the discussions were being centered over crafting a new budget to try and bring the deficit targets in line so that when the time comes that Rajoy is pretty much forced to apply for aid from the EFSF/ESM/OMT programs, the conditions for such aid would already have been met and no new conditions would have to be implemented.
Personally I find it hard to believe that Rajoy will implement any such harsh austerity measures that are necessary to meet the budget deficit targets ahead of regional elections in October. Doing so will be political suicide for the Rajoy government. However, desperate times call for desperate measures, and Spain is certainly in a desperate situation from a fiscal and government funding perspective. Over the last few weeks, Spanish bond yields have been creeping back up and this week the 10 year benchmark has popped back up above 6%. Certainly not a good sign for the stuggling country which is facing the roll-over of approximately €50 bln in debt for the rest of this year. As always, time will tell.
From a technical perspective, this pair is approaching key support levels at 1.2800/20, below which it will face rapid downside to the next key support zone between 1.2650 and 1.2590. For now, the immediate key resistance to watch is the psychological and technically significant 1.3010 which was the neckline of the large head and shoulders pattern early this year which sent the pair plummeting to the 1.2041 yearly lows. Tomorrow is month end and a monthly candle close below that level is key to a sustained bearish outlook. A close above will delay (but not nullify) further losses for the Euro as the pair is still sitting in a very overbought level until we see more significant downside. For today, I will be closely watching the 1.2900/10 area to cap this pair. On the downside I will be looking for a break back below the daily pivot at 1.2875 with an eventual test of the key 1.2800/20 area. Of course positive/negative news can change that in a flash.
As always, be well and trade safe.
E/U H1
E/U H4
Today we may get a glimpse into what Spanish PM Rajoy has in store for his people and pretty much the rest of Europe. Today we get the budget. It has been mentioned many times in the media that there were back room discussions between the Spanish government and the EuroGroup over fiscal reform in Spain and that the discussions were being centered over crafting a new budget to try and bring the deficit targets in line so that when the time comes that Rajoy is pretty much forced to apply for aid from the EFSF/ESM/OMT programs, the conditions for such aid would already have been met and no new conditions would have to be implemented.
Personally I find it hard to believe that Rajoy will implement any such harsh austerity measures that are necessary to meet the budget deficit targets ahead of regional elections in October. Doing so will be political suicide for the Rajoy government. However, desperate times call for desperate measures, and Spain is certainly in a desperate situation from a fiscal and government funding perspective. Over the last few weeks, Spanish bond yields have been creeping back up and this week the 10 year benchmark has popped back up above 6%. Certainly not a good sign for the stuggling country which is facing the roll-over of approximately €50 bln in debt for the rest of this year. As always, time will tell.
From a technical perspective, this pair is approaching key support levels at 1.2800/20, below which it will face rapid downside to the next key support zone between 1.2650 and 1.2590. For now, the immediate key resistance to watch is the psychological and technically significant 1.3010 which was the neckline of the large head and shoulders pattern early this year which sent the pair plummeting to the 1.2041 yearly lows. Tomorrow is month end and a monthly candle close below that level is key to a sustained bearish outlook. A close above will delay (but not nullify) further losses for the Euro as the pair is still sitting in a very overbought level until we see more significant downside. For today, I will be closely watching the 1.2900/10 area to cap this pair. On the downside I will be looking for a break back below the daily pivot at 1.2875 with an eventual test of the key 1.2800/20 area. Of course positive/negative news can change that in a flash.
As always, be well and trade safe.
E/U H1
E/U H4
Those who say it cannot be done should not interrupt those who are doing it
