Article by AlgosysFx Forex Trading Solutions
The Euro gave up gains in the previous European trading session as confidence among German investors remained in the negative region, although it improved to -18.2 points in September. The single currency also remained lower than the Greenback as a delay in Spain’s bailout request is expected to make worse the European debt crisis. In today’s European session, the shared currency is expected to extend losses versus the Buck on renewed concerns about Spain.
Spain is facing increasing pressure to request for a full-blown bailout, but Deputy Prime Minister Soraya Saenz de Santamaria said that the government is still considering the terms of the bailout, causing some investors to become impatient. If Spain eventually makes a request, some analysts still believe that it would not be that encouraging for the Euro Zone as the imposition of painful spending cuts is seen to hamper efforts to steer the economy back on track.
Tomorrow, Spain is set to auction 3- and 10-year bonds, which would be a key test of investor confidence. 10-year borrowing costs have declined to 5.9 percent from the Euro-era record of 7.75 percent on July 25, since the ECB revealed its new bond-buying program on September 6 to help lower bond yields. The Euro Zone manufacturing and services PMI reports are also up for release and are expected to show contraction of the sectors as projections are below 50 points. With renewed concerns over Spain, the shared currency is set to drop versus the US dollar. Thus, a short position is suggested in today’s European exchanges.
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