Third day of trying to retest the May 19 trend low to
no avail. Daily oscillators have firmed up from the oversold readings last
week and Momentum has become less negative. Bearish bias unless we see a daily
trading range reside fully above the 10-DMA (1.2370) or the 21-day MA is
'cleared. 1.2135 Fibo is key below.
Fitch"s downgrade of Spain to AA+ from AAA as had been rumoured last week as well as this week. They see Govt debt climbing to 78% of GDP by 2013 from under 40% before the crisis roiled financial markets at end 2007. Fitch expects economic growth below Spanish government forecasts; they also note that servicing the increased external debt will reduce the country"s disposable income. They also note that restructuring the "Caja" sector could be substantial. The downgrade impacted several other Spanish banks and financial organizations and the market responded as it should, they hammered EUR/USD and equities. Stocks are down 1.1/1.2%, EUR/USD hit 1.2284 but has rebounded to 1.2310 as traders try to get back to core positions ahead of the long US holiday weekend.