The pressure is still continued at the single currency because of the political risks which threatening the union after Hollande's winning in France and the failure of forming a new government in Greece which will be waiting for another parliament elections next month by God's will.
The negative side of this critical situation is standing mainly over the short term to the single currency with the markets shrugging off any positive data or successful bonds auctions in the Euro zone focusing on these risks which can lead to expelling Greece out of the euro increasing the risks looming around other debt ailing countries like Ireland, Portugal, Spain and Italy.
While the positive side is that this debt ailing country getting out of the euro can make it much more credible especially as EU has been dealing with the Greece situation as a special case in the Euro zone from the beginning despite the weak financial situation of other countries inside the Euro zone but it is not allowed to Greece to say no any measures and there is no leeway to go through without the European strict following up after announcing the second bailing out plan of Greece which counted this expected change into its account in its structure.
The running discussions in the market now are about a great chance of buying the single currency after this event but the fear of contagion risks will be always there with the need of stability in the EU financial system and confidence in the governments ability to get over its budget deficit while the economy is struggling and in need to be revived to make the investors trust that the worst has become behind of us.
So, The ECB can find that it is inevitable again to start another LTROs round or cutting the interest rate as a monetary option with the current growing social direction inside the Euro zone which is fighting the austerities measure and that's still looking from Hollande's stance which can encourage other countries to do so laying on the need of stimulating the economy currently..
God willing, in the case of falling further the pair can meet now 1.2631 which has been formed bottom on 13th of last January and breaking it can open the way for lower supporting levels at 1.2586, 1.2151 before 1.1876 whereas the pair has rebounded forming its bottom on 7th of June 2010 which drove the pair later to reach 1.4939 on 4th of May 2011 whereas the pair has managed to ease back again and in the case of rising again the pair can face resisting levels now at 1.2757, 1.2867, 1.3063, 1.3180 and this can be followed by 1.3281 which its breaking can open the way to 1.3384 again before 1.3489 whereas it has formed its recent top and in the case of breaking 1.3489 the pair can meet other resisting levels at 1.3546, 1.3613, 1.3808 before 1.387 which has not been broken since the end of last October and after several tries to break it in last November.
Kind Regards
FX Market Strategist
Walid Salah El Din
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