EUR/USD finished its correction and is now at lower ground, below another support line. Here are 5 fresh reasons for the fall.
After Trichet was soft on inflation and concerned about the euro’s strength, and after the rumors about Greece leaving the Euro-zone erupted on Friday, we had some significant correction. But that’s over now. EUR/USD dropped under the support line of 1.4282, the lowest since the rate hike in April.
What’s new today? Here are 5 reasons:
- S&P downgrades Greece: No surprise, and rating agencies are often late, but this move is still significant, especially due its strong echoes in the media.
- Fresh direct currency pressure: An incoming member of the ECB from Malta, says that the Euro is historically high and this can become painful for some industries. He follows Trichet.
- German wise men see a fail bail: Senior German economic adviser Peter Bofinger says that the bailout isn’t really working for Greece, and that perhaps stimulus measures are necessary.
- Greek restructuring: The paper that broke the news about the “secret” Luxembourg meeting on Friday regarding Greece leaving the Euro-zone now states that there’s no other option other than restructuring.
- Irish contagion grows: After a very busy weekend in Ireland, in which the idea to bail out from the bailout program was intensively discussed, the Irish prime minister is now pushed towards seizing this moment. Well, at least he’s already certain that Ireland will get a reduced rate. No, no need to cut the corporate tax that Europe wanted earlier.
This breakout still needs to be confirmed, but we’re at lower ground than on Friday. Levels below are 1.4160 and 1.4030. Above we have 1.4375 and 1.4450, which were seen during the correction and now they’re gone.
For more technical levels, analysis and upcoming events, see the EUR USD Forecast.
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