The underwhelming Spanish bond auction was one of the triggers for another massive sell off in European stocks and peripheral bonds.
The euro joins the sell off and has touched 1.2704, around a 100 pips from the levels seen earlier.
The euro is also falling against the pound, with EUR/GBP losing 0.80 once again. Also EUR/JPY is falling as the yen enjoys the risk off environment. However, commodity currencies are falling with the euro.
The euro did manage to rally very nicely yesterday, riding on the sell off in the US dollar. This was triggered by poor retail sales numbers in the US. However, we are now back to reality and even to the debt crisis fears of 2012.
It is important to remember that the US is still “the cleanest dirty shirt”, and the euro-zone is far behind. The upgrade of core CPI was only enough for a dead cat bounce.
Support is holding nicely so far at 1.27. Below this level we have 1.2660. Resistance awaits at 1.2750 but it is weakening. Much stronger resistance appears at 1.2850.
Here are the Levels To Targets In Risk-Off for EUR/USD, Cable, SP500 – JP Morgan
Here is the chart showing the move:
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