Traders should remember the euro zone debt crisis hasn’t gone anywhere. Comments today by German Finance Minister Wolfgang Schaüble sent the euro lower when Schaüble said in a letter to the Bundestag, “it would be a mistake to think that the crisis of trust in the euro area can be solved by a single summit.” The comments sparked a widening of spreads between Italian bonds and German bunds as well as in Spanish bonds. The euro was lower versus the dollar and in the crosses.
Traders have been quick to offer the euro when the EUR/USD rises above 1.45. Initial Support comes in at 1.4440 but the euro could receive a bid should the 1.420 level hold. This is an important support as it coincides with last Friday’s low and the rising trend line on the hourly chart.
Turning to the other debt crisis, Republicans and the President appear to be farther away from a deal and the US debt ceiling negotiations look to the be the key driver in the minds of forex traders. Core durable goods orders are due up shortly and are expected to show an improvement of 0.5%. A reading above this level would likely feed into dollar selling while boosting the dollar block currencies (NZD, AUD, CAD) which are trading at all-time highs.
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