A good rumor always trumps the facts. And we have a good rumor this morning. The EUR has broken through resistance at the 1.3000 level this morning, on a rumor coming from the Wall Street Journal that Spain will ask for financial aid sooner rather than later, which is not what we have heard from Spanish officials, who while they claim that Spain likely will ask for assistance, they don’t expect that to happen before November. Earlier it had been reported that while Spanish Prime Minister Rajoy knows he will need to eventually request aid, he is hoping that the longer he waits to make this request, the better the terms will be for Spain. As the Eurozone debt crisis intensifies, the thinking is that German resistance will ease as they would rather not allow another of the “southern countries” to fail. With the European Summit happening in a few days, there was pressure on PM Rajoy to use that forum to formally request the aid but to this point he is resisting. The economic fate of Spain is more crucial to the Eurozone than the other countries that have had economic troubles in the Eurozone. The Spanish economy is double that of the Greek, Irish, Portuguese and Cypriot economies combined. The request for aid will be a benchmark for the new aid mechanism and will be used as a reference point for possible aid to Italy. The logic of waiting to ask for the aid is that as the conditions worsen, the remaining countries within the Eurozone will be more concerned with the spillover effect of this debt contagion and therefore are more inclined to offer better conditions. The longer that the PM waits, it is expected the better his bargaining position becomes as events within the Eurozone continue to work in Spain’s favor. But all of that hasn’t stopped the EUR from climbing, indicating that “short” positions were prevalent ahead of the rumors. The jump effectively has eliminated those positions and the market has calmed for the most part straddling the 1.3000 level over the last hour. In other currencies, the Canadian Dollar traded quietly overnight, as Bank of Canada Governor Carney stated that he will adjust economic forecasts to reflect the slowing of the global economy. This comment has given speculators reason to expect no interest rate hikes in the near future. The revised forecast will be released next week. The “loonie” remains strong and should strengthen over the coming weeks as crude oil futures may move higher in anticipation of a colder winter than we experienced last year. Adding to the CAD strength is it is a “risk” currency and further appreciation of the EUR will add to the strength of the CAD. The Spanish aid rumor has also helped the GBP move higher as the currency has broken the 1.6100 level to trade as high as 1.6109. The resistance here is expected to be at 1.6130. The GBP was also aided by stronger Retail Price, CPI and PPI numbers. The expected increases in these numbers has had a positive effect on the British Pound. Lastly as usual, since the EUR has strengthened, the CHF has strengthened as well. During the overnight trading sessions, the USD/CHF has tested and broken the .9300 support level to fall to a low of .9291. Asian and European equity markets are mostly higher overnight and with the DOW Futures positive at 5:00 am, it looks like a good start to the US equity markets today. Having broken the 1.3000 level traders may get a little bolder in testing where the “real” sellers are. A positive stock market during the North American trading session could push the EUR to test resistance at 1.3035 and 1.3060. Support for the EUR is now at 1.2985, then 1.2960. For more, see the Euro to dollar prediction. Matthew Lifson Matthew Lifson Matthew Lifson is a Foreign Exchange Trader and a Market Analyst. with Cambridge Mercantile Group. View All Post By Matthew Lifson Forex News Today: Daily Trading News share Read Next EUR/USD Oct. 16 – Breaks 1.30 After Strong German, US Kenny Fisher 11 years A good rumor always trumps the facts. And we have a good rumor this morning. The EUR has broken through resistance at the 1.3000 level this morning, on a rumor coming from the Wall Street Journal that Spain will ask for financial aid sooner rather than later, which is not what we have heard from Spanish officials, who while they claim that Spain likely will ask for assistance, they don't expect that to happen before November. 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